Credit: Adrian Pingstone/Wikipedia

Thomas Cook finally leaves the runway

The travel operator defies Tunisian terror, the Greek debt crisis and a botched apology to make a £19m profit after four years of losses.

by Adam Gale
Last Updated: 25 Nov 2015

Four years is a long time to be in the red, especially for a public firm with dividend-hungry shareholders. So it’s perhaps unsurprising that those same shareholders reacted warmly when Thomas Cook announced it had finally returned to full year profit today, for the first time since 2010. Shares rose 8.8% to 107p by lunchtime, though they’re still a third down from their level in May.

The travel operator made £19m before taxes for the year to September 30, compared to a £115m loss the year before, as the dramatic restructuring begun under Harriet Green and continued under current chief executive Peter Fankhauser finally pays off.

It’s all the more impressive given the panoply of disasters that has befallen Thomas Cook this year: the Greek debt and migrant crises, the terror attack in Tunisia that Fankhauser said would slash earnings by £25m and Justin King’s critical report of the way the firm handled the deaths of two children from carbon monoxide poisoning at one of its hotels in 2006.

 ‘The past year has... presented considerable challenges for Thomas Cook as we confronted the mistakes that were made following the deaths of Bobby and Christi Shepherd in Corfu nine years ago. I am clear that we need to learn from the tragedy and do things differently in the future,’ Fankhauser said on the latter, adding that Thomas Cook launched a Safer Tourism foundation with the children’s mother.

Thomas Cook benefitted from strong demand in the UK (where underlying earnings rose 41%) and northern Europe. It’s focussing on higher-end destinations and has entered into a potentially lucrative partnership with Chinese firm Fosun to tap into that country’s rapidly growing leisure market, and Fankhauser said it expects to obtain regulatory licenses to begin trading there in the New Year.

It’s also trying to cut its large and expensive debt pile, slashing £156m off it over the last year. By all accounts the strategy is working, but investors are unlikely to be happy until profits are both normal and higher than a few million.  

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