Thomas Cook pins hopes 
on technology

The company posted an underlying operating loss of £26.5m in the three months ended June, versus a profit of £20.1m in the same period last year despite a lift in foreign bookings from consumers exasperated with rainy weather at home.

Harriet Green, who joined the 171-year-old company from Leeds-based electronic parts distributor Premier Farnell in July, said she would be able to “bring a fresh pair of eyes” to existing industry problems.

“I don’t think moving from one industry (to another) is so much of a challenge ... There are many things that are actually very similar and in my view of business, all roads ultimately lead to technology,” she said.

Thomas Cook has been hit hard by tough trading conditions, particularly in Britain where its core customer base of families with young children is suffering in the economic downturn.

The group has also been affected by unrest in popular destinations such as Egypt, Tunisia and Morocco.

In May it reported half-year pretax loss of £328.3m and completed the sale and leaseback of 19 of its planes as it struggled to find money.

“In our view they (new management) face a very difficult turnaround task. We expect early views from the new team in November and a detailed plan to be announced in the spring,” Numis analysts said.

Thomas Cook said foreign holiday bookings had picked up in recent weeks after subdued demand in April and May, as the sodden European summer drove rain-weary Britons, Germans and Russians to seek the sun in Greece and Tunisia.

UK bookings as of July 29 were flat versus the same time last year, while bookings in central Europe were one per cent higher, boosted by demand from Germany.

In comparison, bookings in west Europe were down nine per cent compared with the same time last year, as trading, particularly in France, stayed tough.

Net debt at June 30 was £1.01bn, versus £902.5m at the same time last year.

It has striven to pay down its debt through selling its Spanish hotel chain Hotels Y Clubs De Vacaciones and expects to complete the £87m sale of its Indian unit by August 22.

While the outlook remained challenging, the company said its quarterly financial trend was improving and it expects to post a full-year result broadly in line with expectations.

In a note, Douglas McNeill at Charles Stanley Securities said: “The final quarter of (interim CEO) Sam Weihagen’s impromptu year in charge has delivered a semblance of normality.

“Our forecasts are unlikely to move much, and the quarterly result is consistent with our view that the December covenant test will be passed.

“We retain our positive view on the stock, based on the belief that the market is overestimating the size of the rights issue which we expect next year.”

Ms Green spent six years as chief executive officer at Premier Farnell. During her tenure, Premier’s total shareholder return rose by 15.4 per cent.