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Travel industry news

25 Nov 2015

BY TTG Staff

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Thomas Cook returns to profit

Thomas Cook has overcome problems in some of its holiday destinations to return to profit for the first time since 2010.

Thomas Cook store

The news marks another major milestone in the company’s recovery after it almost went out of business in 2011.

 

The vertically integrated tour operator swung from a post-tax loss of £115 million last year to a small profit of £19 million for the 12 months to the end of September.

 

Revenue fell by 8.8% to £7.8 billion. The company expects to return to dividend payments in 2017.

 

Trading in the UK business has continued to improve.

 

UK bookings for winter 2016-15 are 8% higher than at this time last year, with average selling prices 2% ahead.

 

For summer 2016 the UK is 23% sold, with bookings higher by 5% than at this time last year,

 

Underlying earnings before interest and taxes (Ebit) rose from £89 million in 2014 to £119 million this year.

 

The improvement in the UK business makes up for some weakness in other source markets.

 

The continental Europe division, which includes France, Germany and Russia, saw its underlying Ebit decline by 30% to £71 million.

 

Peter Fankhauser, chief executive of Thomas Cook said: "2015 has been a year of real progress as good trading combined with rigorous cost control to deliver our first positive profit after tax in five years. Despite turbulence in some of our destinations, the underlying business performed in line with our plans at the start of the year, demonstrating its greater resilience."

 

Thomas Cook is one of the many companies still suffering in the wake of terrorist attacks in Tunisia and Egypt – both key destinations for UK tourists. The recent attack in Paris has also created uncertainty closer to home

 

Cook has been on the recovery path ever since it came close to going out of business in 2011. Over the last four years it has cut costs, sold businesses and tried to improve its product offering.

 

This time last year Thomas Cook parted company with controversial chief executive Harriet Green.

 

Green was one of the former bosses who came under fire for Thomas Cook’s handling of the deaths of two children on one of its holidays nine years ago.

 

Eventually, Fankhauser apologised, saying the company could have acted better. It has since agreed to setup a carbon monoxide charity in memory of Bobby and Christi Shepherd.

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