Thomas Cook rocked as chief quits

Outgoing chief executive Harriet Green. Picture: PA
Outgoing chief executive Harriet Green. Picture: PA
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HOLIDAY giant Thomas Cook jolted the stock market yesterday with the abrupt departure of its chief executive, Harriet Green, who is credited with reviving the troubled business since taking the helm in 2012.

The shares tumbled as much as 23 per cent before closing almost 18 per cent down at 113.5p after the company said Green would be replaced by long-serving chief operating officer, Peter Fankauser.

Shock in the market was compounded by a warning from Thomas Cook that growth would slow to “a more moderate pace” in 2015 to reflect a tougher trading environment for the holidays industry.

Wyn Ellis, leisure analyst with Numis Securities, said there would be justifiable scepticism on the timing of Green’s departure. She joined from electronics company Premier Farnell in July 2012 and earned pay and bonuses worth £2.8 million in the financial year 2012-2013.

“After all the hype, the transformation of Thomas Cook is far from complete. The timing is unfortunate, especially as the trading environment appears to be deteriorating,” Ellis said.

There was also confusion because the outgoing boss only days before told Management Today’s Inspiring Women conference the turnaround at Thomas Cook was “absolutely not done”.

She said: “You can’t do a transformation on this sort of scale in a year or two. I usually say it’s about six years.”

But yesterday, following her resignation, she said: “I always said that I would move on to another company with fresh challenges once my work was complete. That time is now.

“I wish all of the team at this re-energised company continued success as they move to the next phase of the company’s development.”

Her restructuring of the group involved major cost savings, including significant job losses, business disposals, exiting low-margin operations, selling some hotels and reducing the size of the company’s airline fleet.

Green is replaced with immediate effect by Fankhauser, who has been chief operating officer for 13 years and is credited with leading the restructuring of Thomas Cook’s UK division.

Group chairman Frank Meysman said: “Harriet has had a highly positive impact on this company. We emerge from her transformation stronger, with a clear strategy, world-class leadership team, updated brand and a renewed focus on the customer.”

A company statement added: “We have de-risked our business by reducing low profit and high risk operations, through business disposals, strategic reductions in risk capacity in France and Russia (both difficult markets along with Egypt), and the removal from sale of low quality product.”

Thomas Cook posted reduced full-year losses of £114m yesterday , including restructuring costs, compared with a bottom-line loss last time of £163m.

Underlying earnings, excluding one-off items, interest and tax, rose 44 per cent to £323m. Revenues fell £727m to £8.6 billion, with the stronger pound and lower demand for Egypt holidays also having an impact.

It offset some of the revenue fall by generating £186m in sales from newly launched products, including the rollout of more exclusive, higher profit margin holidays. Thomas Cook said UK bookings for this winter had seen volumes rise 5 per cent on a year ago and average selling prices were up 1 per cent. But bookings in France were down 15 per cent, with prices 3 per cent higher.

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