New Thomas Cook chief Harriet Green today outlined early stages of the group’s new strategy while issuing the group’s second year of headline losses.
Statutory losses for the year to September 30 came in at £590 million against £518 million a year earlier. This included goodwill and other write-downs of £369 million and business repositioning costs of £81million.
Underlying profit from operations was down by 49% at £156 million against £304 million the previous year. The figure was “in line with expectations” but was “significantly impacted” by £110 million of higher fuel costs.
Net debt was reduced to £788 million from £891 million.
Green’s business transformation plan includes developing an online centre of excellence “with powerful channels tailored to local markets by leveraging the latest technology to deliver true omni-channel distribution”.
Changes in the organisational structure and key management “in order to break down historic silos, energise our people and implement cultural change” are also underway.
Further efficiency will be driven through global procurement, centralised hotel purchasing and consolidation to reduce fixed and overhead costs and improve working capital, according to the company.
This will result in more than £100 million of annual cost benefits and £50 million of incremental working capital improvements and “significant further opportunities to come”.
Green said: “In 2012 over 23 million customers enjoyed their holidays with us, 50% of whom went on an independent or flexible holiday.
“Through building on our core product strengths to further improve our proposition with new and different products, we have a significant opportunity to unlock the full potential of our brands and attract more customers.
“As we develop our business transformation plans we will continue to place our customers and employees at the very centre of our business.
“Through leveraging existing best practice and by focusing on efficiency, harnessing the power of technology and delivering on our commitments we are addressing the most immediate challenges facing the group and creating a platform for future growth.
“These results reflect the major issues that Thomas Cook faced last year, but they mask the material improvement that we made in the fourth quarter.
“Our brand has demonstrated its strength by recovering all the ground lost during last year’s difficulties and we have identified significant further efficiency improvements.”
She added: “The year ahead is the initial stage in this recovery and as we embark upon our first year of business transformation, we are optimistic about the future and look forward to updating you on our full plans and additional financial benefits in the spring of 2013.”
Susan Duinhoven, who previously led Cook’s West Europe business, has been appointed to lead the group’s web transformation. This included closer integration of web development into the operating businesses whilst maintaining a web centre of excellence.
Christoph Debus has been appointed as group head of air travel to review the air travel strategy, covering in-house airlines and third party capacity.