City analysts are expecting a further round of cost savings to be announced by Thomas Cook this week as it reveals its full-year trading figures on Thursday.
According to reports, the City wants to see around £100 million of additional savings on top of the £400 million already announced.
Cook is expected to announce a pre-tax trading profit of £98 million, compared to just £12.7 million last year, although the Daily Telegraph said it “remains in the red” once exceptional items are accounted for.
The newspaper quoted a note from Wyn Ellis, analyst at Numis Securities, who said the City would be disappointed if further substantial savings are not announced this week.
It said: “The shares have drifted sideways recently and we believe that the market will be disappointed if additional cost-out savings of at least £100m are not announced.”
Thomas Cook has seen a remarkable turnaround in fortunes over the last 18 months following the £485 million in pre-tax losses it incurred in 2012 which prompted a £1.6 billion refinancing by its banks to address its spiraling debt.
The City is expecting further advances in addressing this debt in Thursday’s figures after Cook announced it had halved to £452 million in June.
Anticipating the details of Thursday’s announcement, Morgan Stanley forecast further cost savings to come from more flexible holiday product.
It said this will likely involve “further improvement to its holiday product, shifting to more flexible capacity, changing fare structures between package/independent holidays, tackling the cost of third-party distribution, increasing online sales and driving further savings through joint purchasing and joint IT platforms”.
Last week it was suggested Thomas Cook’s deal to take easyJet seats had been watered down following statements made by the budget airline’s chief executive Carolyn McCall.
However, Cook has dismissed this, saying it expects to fly as many customers on easyJet next year as they did this year and there had been no change to their agreement.
The Express reported analyst Ian Rennardson, a broker at Jeffries, as saying he expects cost savings to come from a further round of job cuts.
Cook has already slashed 2,500 roles since chief executive Harriett Green came in to lead the turnaround, including many high street staff as 100 stores were closed.
The latest round of job cuts were expected to come in IT, human resources and procurement, according to Rennardson.
“Debt has fallen and the balance sheet is considerably strengthened, more cost savings are promised and, importantly, trading remains robust,” he was reported as saying.