Thomas Cook Turnaround Delivers Profit
Shares in Thomas Cook soared 11% on opening after it confirmed a return to profit amid a massive turnaround plan.
The world's oldest travel firm made an operating profit for the first time since 2010 - of £13m while total losses before tax fell to £158m at the travel group in the year to the end of September, compared to £337m in the previous 12 months.
Earlier this year the company announced plans to axe 2,500 jobs in Britain as part of its turnaround efforts after a £1.6bn recapitalisation in 2011.
Thomas Cook, which has been plagued by the eurozone debt crisis, unrest in Egypt and high fuel costs, closed 227 stores in the UK over the past 12 months - more than a fifth of the total - and cut the number of brands it operates from 85 to 30.
The travel business is also selling off stakes in its airline and NATS, the air traffic control service, as well as outsourcing its tour business which it says will raise £61m.
Chief executive Harriet Green said: "I am delighted to report that the first 365 days in the transformation of Thomas Cook have been a great success.
"We've taken out more cost more quickly than originally planned," she added.
Ms Green took over the business in July 2012 - with no experience of the industry - but convinced she could turn around the world's oldest travel business.
In the last 12 months, she has presided over a six-fold increase in the company's share price as investors welcome her plans to restore profitability.
Thomas Cook said it was upping performance targets under the recovery drive, helped by the faster-than-expected progress on slashing costs from the group, which will see it take out £340m by the end of the new financial year - up from an original £315m aim.
Ms Green added: "No chief executive can give assurances about exact numbers of jobs, but what I can say is that Thomas Cook is back and it's healthier."
But while the underlying business is back in the black, there remain pressures on Thomas Cook and its rivals from the effects of the consumer spending squeeze.
Thomas Cook warned: "Compared to last year, (current) winter bookings have been adversely impacted by social unrest in Egypt, which has resulted in significantly reduced demand to that destination."
UK winter bookings were 7% lower than the previous year, it said.