BUSINESS NEWS
AN EX-SENIOR MANAGER AT THOMAS COOK IDENTIFIES A SERIES OF MISTAKES “This failure isn’t a surprise. The company has been struggling for more than a decade following a catalogue of errors.”
1. The merger with MyTravel was strategically wrong, buying a company that wasn’t in the best of health, an error proven 10 years later with a £1 billion write-down. The deal meant Cook inherited some toxic hotel leases.
2. The waste of £200 million-plus on trying to build a pan-European reservation system – an impossible task with each country wanting different things. It ended with no new system.
3. A £290 million share buy-back programme in 2008, using company cash to shore up the share price.
4. The purchase of companies such as Hotels4U with no clear strategy.
5. Entrance into the Russian and Indian markets – a complete disaster.
6. Trying to create a pan-European e-commerce platform in 2010 and spending vast amounts on a London office, taking autonomy from the operating companies where the trading expertise was. Result – hundreds of millions wasted.
7. Senior management refusing to accept the retail footprint was too large, and purchasing The Co-operative Travel,
duplicating stores in many towns. It cost the business at least £200 million.
8. After rightly ousting the CEO in 2011, the replacement embarked on a personal brand-building exercise.
9. Doing too little too late on differentiating product, with input costs outpacing selling prices, driving down profit margins.
10. The downward spiral started in 2007. The latest management have been fighting historical debt and mismanagement, doomed from the day they started.
12 years of turmoil at Thomas Cook
2007: Thomas Cook, which is jointly owned by German retail group Karstadt-Quelle and Lufthansa, to merge with MyTravel (Airtours). Lufthansa sells its stake. Merged Thomas Cook Group lists on London Stock Exchange.
2008: Global financial meltdown. In Sept, XL Leisure Group fails, triggering major repatriation.
2009: Recession sees UK outbound travel market decline 20% in 2008-10.
2010: Cook announces merger with The Co-operative Travel.
2011 July: Regulatory approval for Cook/ Co-op merger expands group retail estate to 1,204 shops. Cook issues third profit warning in 12 months (previous warnings in Aug and Sept 2010).
Aug: Chief executive Manny Fontenla-Novoa resigns.
travelweekly.co.uk
Oct: Cook agrees £100 million credit deal; completes merger with Co-op.
Nov: Suspends results announcement pending fresh £200 million deal with banks.
2012 April: Cook confirms fresh talks on refinancing.
May: Secures £1.4 billion refinancing.
July: Harriet Green appointed chief executive.
2013 Oct: Cook adopts ‘Sunny Heart’ logo.
Dec: First full-year operating profit in three years.
2014 Oct: Cook UK head Peter Fankhauser admits: “The whole Airtours integration went completely wrong.”
June: Cook/Fosun announce joint venture. Beach massacre of UK tourists in Tunisia.
Dec: Cook reports £19 million profit after tax after five barren years, following losses of £158 million (2014), £283 million (2013) and £378 million (2012).
2016 Jan: Cook switches 1.2 million seats from Turkey to the Western Med following security concerns.
Nov: Harriet Green departs. Fankhauser appointed group chief executive.
2015 March: Fosun acquires a 5% stake in Thomas Cook.
May: Inquest into deaths of two children from carbon monoxide poisoning on Cook holiday in Corfu in 2006 ends with a verdict of “unlawful killing”.
Aug: Fankhauser reports: “Despite the trading environment, Thomas Cook is a much stronger business. We’re well positioned to capitalise on opportunities when markets improve.”
Dec: Cook reports operating profit of £205 million and pays first dividend to shareholders in five years. Fankhauser says: “The actions we took to shift our holiday programme into the Western Mediterranean helped us maintain revenue.” T
ravel Weekly reports: “Thomas
Cook UK’s operating profit has gone from zero in 2012 to 4.9% a year ago and 6.4% in the 12 months to September.”
2018 Sept: Cook profit warning. Blames hot summer for decline in lates market. Nov: Second profit warning, including a reclassification of charges, issued two days before full-year results.
2019: Feb: Cook announces review (sale) of its airline.
26 SEPTEMBER 2019 79
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84
