Thomas Cook’s focus on costs rewarded as losses cut by £10m

Revenues fell £15m to £1.66bn, but chief executive Harriet Green, who joined from Leeds-based Premier Farnell, said there has been progress in the company’s turnaround.

Excluding Egypt, Thomas Cook said revenues in the first quarter grew by 4.1 per cent on the year before.

Egypt has suffered three years of political upheaval marked by two presidential departures and hundreds of deaths as religious and military factions fight for supremacy.

Despite the turmoil, Thomas Cook’s underlying losses in the seasonally quieter trading period improved by £10m to £56m, reflecting the company’s focus on costs.

The company said 86 per cent of its winter programme has been sold, while the summer schedule is around 39 per cent sold, in line with last year.

Bookings for summer holidays are a closely-watched measure as they generate the bulk of the firm’s earnings.

Average selling prices are expected to increase as the company looks to sell a higher proportion of exclusive hotel offers to UK customers.

The tour operator is half-way into a three-year cost-cutting plan devised by Ms Green to turn the company around by slashing jobs, shutting branches and selling parts of its business.

Thomas Cook also announced the £45m sale of Gold Medal, a supplier of long-haul flights, hotels and car hire, to Dubai travel company dnata, which is part of the Emirates Group.

The sale of the business, which employs around 470 people, means the company has met its target to raise between £100m and £150m from the sale of non-core businesses some 18 months ahead of schedule.

The agreed sale of Gold Medal brought disposal proceeds to £125m.

Gold Medal will continue as a supplier of long-haul scheduled flights to the Thomas Cook businesses in the UK.

Ms Green said: “Our first quarter results, new product revenue growth, web integration, cost out and profit improvement programmes ... give us confidence of achieving our targets and delivering even more value in the years to come.”

The world’s oldest travel group, whose history dates back 173 years, announced plans last November to cut costs by £440m by 2015 – 10 per cent more than previously expected – and to deliver a further £440m of savings by 2018, partially through a move to sell more holidays online.

Some 36 per cent of holidays were booked online last year, up from 34 per cent in 2012.

The group said that significant progress has been made to integrate web platforms and enhance the content to boost online bookings and achieve the group’s target of more than 50 per cent web bookings by 2015.

Since the end of 2013, 50 per cent of all website visits to thomascook.com were from a mobile, tablet or phablet (a smartphone with a large screen), with total searches up 60 per cent compared with the same period last year.

In January, its UK and Northern European websites experienced their highest ever traffic in a day and in the same month, traffic through its new direct to consumer website in Germany, thomascook.de, rose 43 per cent.

Ms Green joined less than two years ago, after the company was brought to its knees in 2011 from the combined impact of the eurozone debt crisis, high fuel costs and political turmoil in popular holiday destinations such as Egypt and Tunisia.

Shares in Thomas Cook have more than doubled over the last year and are up over 30 per cent in the last three months.

The group said net debt reduced by £273m to £1.29bn.

Ms Green said the group has made progress in improving the performance of its businesses in France and Russia and both are showing an improvement on last year

The group’s first half results will be announced on May 15.

Thomas Cook has announced plans to close its Birkenshaw office in January 2015.

The decision follows a review of its operations and will see work transferred to Peterborough and in some cases potentially outsourced.

Last year, Thomas Cook closed a call centre in central Bradford with the loss of 500 jobs.

The staff affected by the latest decision are understood to include some who transferred from that site.

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