Thomas Cook returns to profit

Thomas Cook has made a post-tax profit for the first time in five years despite facing what chief executive Peter Fankhauser described as ‘an unprecedented level of disruption’ in 2015.

He said he’d been in the industry for 30 years yet had never previously endured such wordwide problems.

The group made a profit after tax in the year to the end of September of £19 million, compared with a loss of £115 million last year, despite a £754 million drop in revenue.

Its operating profit for the year was £211 million, a rise of £159 million over last year.

During the year Thomas Cook cut its debt mountain, which reached almost a billion five years ago when it nearly toppled the group, down from £326 million to £139 million.

Fankhauser added: "2015 has been a year of real progress as good trading combined with rigorous cost control to deliver our first positive profit after tax in five years. Despite turbulence in some of our destinations, the underlying business performed in line with our plans at the start of the year, demonstrating its greater resilience."

The group expects to pay a dividend in early 2017 in respect of earnings next year.

It said trading in 2015 was well overall, ‘despite external headwinds’.

Its UK business was strong and underlying EBIT rose 42% to £119 million. However, EBIT in Continental Europe fell 21%.

Winter trading in the UK and Northern Europe has got off to an ‘encouraging’ start.

"Customers have responded well to our increased focus on higher-quality hotels with our own-brand properties proving particularly popular, growing bookings by more than 40% over the year. We have continued to build on this success with the launch of a new boutique concept, Casa Cook, with the first hotel set to open next spring in Rhodes," added Fankhauser.

"Looking across the Group, the UK continued to strengthen as a better quality holiday offering and other business improvements delivered a 42% increase in underlying operating profit. Northern Europe and our German airlines business also performed well with underlying operating profits up 23% and 19% respectively. As previously highlighted, Continental Europe, particularly Germany and France, were weaker due to more competitive trading conditions.

"Of course, the past year has also presented considerable challenges for Thomas Cook as we confronted the mistakes that were made following the deaths of Bobby and Christi Shepherd in Corfu nine years ago. I am clear that we need to learn from the tragedy and do things differently in the future. Last week, we launched the Safer Tourism Foundation together with the children’s mother, Sharon Wood.

"But we also recognise that change needs to come from within Thomas Cook, putting our customers first in everything that we do. That is why we have introduced customer satisfaction as a new internal measure of success and why we are rolling out a 24-hour hotel satisfaction promise for key hotels across the group. It is also why we are putting a renewed focus on the quality of our holiday offering and pushing hard to further develop our online and retail channels.

"During the year our staff have shown great dedication in times of crisis, working tirelessly to support our customers. Their response to recent events in both Egypt and, earlier in the year, Tunisia, shows what we can achieve when we pull together. In a time of geopolitical uncertainty, that level of customer care is a key advantage of our packaged holiday offering.

"The new financial year has got off to a good start with encouraging trading overall for Winter 2015/16 and Summer 2016. With our business on a firmer financial footing, we have a clear strategy in place to deliver greater value for customers and sustainable growth for our shareholders."