Thomas Cook to axe 200 UK stores

The 170-year-old group, which came close to collapse last month, has run up losses of almost £400 million after a year in which the slump in consumer confidence and the Arab Spring wrecked demand for its package holidays.

It will close 200 stores it says are not profitable over the next two years as leases expire – 125 more than previously announced – after completing a merger with the Co-op Travel.

The company, which has 1,300 shops, confirmed that 661 staff in 115 stores were expected to be told their branch could shut. In Scotland, only seven stores out of 110 north of the Border have been earmarked for closure.

Yesterday, the company set out a turnaround plan for the UK business, including focusing on fewer and better-quality hotels and a drive for more online bookings. But analysts said Thomas Cook faced another difficult year as the UK teeters on the edge of another recession.

Interim chief executive Sam Weihagen said: “There’s no silver bullet to turning around the UK business, but I’m confident that the measures will improve the profitability in years to come.

“Thomas Cook is a very strong brand in the UK and it has enormous possibilities to make sure it becomes a profitable business.”

Thomas Cook was plunged into crisis last month after it returned to lenders to ask for an additional £100m lifeline, sparking fears of a collapse.

It admitted there had been an “adverse impact” on bookings before it agreed a new package with lenders, although it said demand had largely recovered.

The group said it was encouraged by an 8 per cent rise in bookings from UK customers for next summer, although UK bookings for the current winter season were down 11 per cent.

Its UK business saw its underlying profits fall 68 per cent to £34.1m in the year. Disruption from the Arab Spring cost it some £15m as holidaymakers decided to avoid countries in North Africa and the Middle East hit by popular uprisings.

Thomas Cook plans to sell £200m of assets over the next 18 months, aiming to take a chunk out of its debt mountain, which rose by 11 per cent to £891m in the year. It has already sold a stake in five hotels and a golf resort in Spain.

Manuel Cortes, general secretary of the Transport Salaried Staffs’ Association, said: “This is deeply disappointing news for Thomas Cook staff, especially in the run-up to Christmas.”

“We want immediate talks with the company’s chief executive to see just what we can do to mitigate the impact of this announcement on our members.”

BUSINESS, PAGE 42