THOMAS Cook is expected to make a profit
of £20-£30 million this year but has admitted it will need to reach more
“acceptable” levels in future.
At
a City briefing, chief executive officer Thomas Cook UK Alan Stewart said
£20-£30 million was a “good guess” in terms of annual profit. The turnaround
for the year will be more than £75 million.
But
Stewart – who described last year’s accounts as a “dog’s breakfast” – said a
profit of £30 million was still not acceptable.
He
said future growth will come through driving up profits not volumes, while the
focus for improved distribution will be call centres and Teletext.
“We
will build up a business that in five years’ time will reach acceptable levels
of profitability. That would have to be three times what we have now.”
Stewart
made a plea to operators not to pile on capacity and stressed the need to
manage it carefully.
“Thomas
Cook is not going to put on capacity that is not sustainable. The key to
credibility is careful capacity management.”
In
what could be interpreted as a veiled criticism of Airtours’ announcement to
add extra stock this summer, he added: “Putting on capacity might seem to help
an individual company but they lose out further down the line. It comes with
industry maturity. But if other people put on capacity we have the power to
control our own destiny.”
He
said Thomas Cook had already planned capacity cuts last year but the September
11 attacks – which came just days before it was due to announce its
cost-cutting measures to save £140 million – forced the company to make
“deeper” cuts.
Stewart
said the transformation of the business over the past four years meant in-house
sales were now at levels of 70% compared with a previous 40%. Market share for
Thomas Cook was estimated to be 13%.
Stewart
said sweeping changes were needed when he took over the job.
“The
reality was we had a huge mismatch of brands with some pretty downmarket
products. We did have some problems with JMC.
“There
was a lack of communication in the business and we had a three-year history of
profit underperformance,” added Stewart.