Thomas Cook outlines growth strategy
Thomas Cook Group has unveiled plans to achieve operating profit of more than €620 million in 2009/10 by placing less focus on mainstream tour operating and more on independent travel and financial services.
Outlining its strategy to investors and analysts today, the group said it was looking to grow EBITDA (earnings before interest, tax and exceptional items) to more than €800 million.
It said it would “improve performance in mainstream tour operating, make significant advances in independent travel, travel- related financial services and emerging markets, and grow overall revenue and profit”.
Group revenue is forecast to grow to around €13 billion in 2009/10, with revenue from independent travel to grow from €2.2 billion in 2005/06 to €3.3 billion in 2009/10.
Joint chief executive Manny Fontenla-Novoa also revealed that it was now expecting to save €200 million in the MyTravel merger synergies, €60 million more than it had initially predicted.
“Through the merger of Thomas Cook and MyTravel we have transformed both our business and the industry in general.
“In the last five months we have almost completed the integration, announced the merger of our German airline, Condor, with Air Berlin, and taken steps to align capacity with demand.
“Building on this strong foundation we are now entering a further new and exciting phase of our development which will focus on leveraging the strength of our mainstream business, developing a market leading independent travel business, driving further growth through our unique travel-related financial services capability and taking advantage of the significant opportunities that emerging markets represent for us.”
Thomas Cook said it would increase targeted online sales to 35% in 2009/10 as part of its strategy of increasing controlled distribution.
It will also “explore investment opportunities, including acquisitions, in mainstream, independent travel, travel-related financial services and emerging markets, while maintaining an asset-light business model”.
The group expects revenue from mainstream to decline from 80% of the total in 2005/06 to 72% in 2009/10.
Meanwhile, revenue from independent travel is expected to increase from 18% in 2005/06 to 25% in 2009/10.
Revenue from financial services is expected to increase as a proportion of the total from 2% in 2005/06 to 3% in 2009/10.
In 2005/06, financial services generated €215 million of revenue and €52 million of EBIT. Within that, the proportion of revenue from foreign exchange is expected to fall from 69% in 2005/06 to 56% in 2009/10. The proportion from insurance remains 31% and the proportion from cards rises from zero to 13%.
By Bev Fearis
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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