Thomas Cook confident on turnaround as disposals hit target

Written by Reuters | London | Updated: Feb 11 2014, 22:09pm hrs
Thomas CookThomas Cook said that summer bookings were developing in line with its expectations. Reuters
British holiday operator Thomas Cook said a 45 million pound sale on Tuesday helped it reach a target for disposals ahead of schedule as it reported a narrowing seasonal loss, giving it further confidence in its turnaround plan.

The company also said that summer bookings were developing in line with its expectations. Bookings for summer holidays are a closely-watched metric as they generate the bulk of the firm's earnings.

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

The agreed sale of Gold Medal, a distributor of scheduled flights, hotels and car hire, on Tuesday to a unit of the Emirates Group for 45 million pounds, brought disposal proceeds to 125 million pounds, the company said.

It had set a target for earning between 100 and 150 million pounds from divestments by the end of 2015.

The world's oldest travel group, whose history dates back 173-years, posted an underlying operating loss of 56 million pounds in the three months to the end of December, a 15 percent improvement on the corresponding year earlier period.

"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," Chief Executive Harriet Green said in a statement.

Thomas Cook announced plans last November to cut costs by 440 million pounds by 2015 - 10 percent more than previously expected - and to deliver a further 440 million pounds of savings by 2018, partially through a move to sell more holidays online.

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

Shares in Thomas Cook, which have more than doubled over the last year and are up over 30 percent in the last three months, closed at 185.4 pence on Monday, having slumped as low as 8 pence in late 2011.