The chief executive of The Co-operative Travel has backed Thomas Cook to overcome its financial difficulties and described the retail joint venture as a “fantastic” deal that saved thousands of jobs.
Setting out his vision for the Co-operative movement as guest speaker of the latest ITT Odyssey supper at the House of Commons last night Marks admitted the Co-op was in too many sectors to focus on running a successful businesses.
He revealed he came to the conclusion ahead of the Cook deal that The Co-operative Travel had little prospect of improving its financial performance in coming years and that it had not been making much money.
But he backed the Cook and the retail joint-venture, the board of which he sits on, to prosper in the future and said the pain of agreeing the deal had been offset by the fact that it saved 3,000 jobs.
The merger was finally completed last year forming the UK’s largest travel agency retail network with over 1,200 stores, although 200 of those will close due to the financial troubles at Thomas Cook thjat emerged since the deal was struck.
At the time the merger was expected to generate £35 million in savings a year and add £14 million to the Co-op’s annual profits and £32 million to Cook’s.
“We have to make tough choices and it was about scale. As a travel agent we are in a high-volume, low-margin business.
“We were not making that much money and when we looked at the prospects of whether we could make much more money over the next few years the answer was no, it was going to be very difficult and the business case for the joint venture was very compelling.
“It was very painful but one of the things that eased the pain was the protection of 3,000 jobs that were at stake. This deal protected those 3,000 jobs.”
Marks revealed that the deal had been initially resisted by the Co-op’s board and had been more difficult to have agreed than its £2 billion Somerfield buy-out.
“Undertsandably they were worried about the brand, they were worried it would be diluted because of values and ethics but they were persuaded because Thomas Cook is a brand of heritage, it was not just a money making machine.
“The consuming public trust Thomas Cook, it’s the number two travel brand in the world and it will survive and it will thrive, I promise you.”
Marks described the current trading conditions in the UK as “pretty grim” the economy having suffered the deepest recession since the 1930s but he was confident in the British public’s determination not to forgo their annual holiday.
As well as the joint-venture Marks spoke of his continued commitment to the ethical style of business that the Co-op is known for.