Harriet Green: Thomas Cook is not broken

Thomas Cook will strip at least £100m of costs out of the business over the next three years as it transforms into a leaner, more customer-focused business, new group chief executive Harriet Green announced today.

Speaking at the announcement of Thomas Cook’s end of year results, in which it revealed it had made a loss of £590m, Green said already two-thirds of the management team had been changed since she joined 17 weeks ago. A third of the "leaders" have left, she said, a third have been promoted and another third have been recruited from outside the business.

One of the latest to leave was Stephen Vaughan, former head of Thomas Cook’s London 2012 partnership.

Green acknowledged that the company’s costs were still too high, that there were too many duplicated activities and that it needed to be more streamlined. She said would be looking to introduce Nordic best practices to create a news shape for the UK business.

Each area of the business has now been instructed to look at its costs and identify savings, she said, while further cuts would be made horizontally across the whole organisation.

Already from Thomas Cook’s flying costs have been reduced by £40m and Green said a further £35m of savings had been made by simplifying the business and stripping away layers of duplication between her and the customer.

"We will be taking a further £100m out of the business over the next three years, but this is just after 17 weeks. This isn’ t it," she said.

Green said she was encouraged by results in the fourth quarter, which showed efficiency measures already put in place were beginning to work, and she said "quite satisfied" with trading in the current year. "The operating business is actually profitable," she said.

But Green added: "Fixing the UK business performance is key." She said the company delivered £60m of turnaround benefits this year and was on track to achieve a further £140m in the next year.

 "My commitment to shareholders now is that last year’s results represented a trough from which we can only improve," she said. "Thomas Cook is not broken. It is viable and working. It is an iconic, world-class brand."

The operator’s net debt has been reduced by £103m to £788m, achieved through the sale of assets. Chief financial officer Michael Healy said this would be reduced by at least £50m this year.

Green today bought 500,000 ordinary shares in Thomas Cook, priced at 23p each.