City Cruises

Published on Thursday, March 21, 2013

Thomas Cook offloads loss-making business



Thomas Cook Group has off-loaded its heavily loss-making North America travel businesses to Red Label Vacations for £3.4 million.


The sale includes Thomas Cook Canada and Thomas Cook USA, which are together known as Thomas Cook North America (TCNA).


Collectively the businesses, which includes the tour operator Sunquest and the 60-branch My Travel retail chain in Canada, made a loss of almost £40m last year. Thomas Cook group head of communications Jenny Peters said they had "consistently under performed".


She added: "Canada is a very competitive market with quite significant over capacity. It has not been a core part of our business for a while."


 TCNA also owns ABC Corporate Services Inc. and D-FW Travel Arrangements Inc. in the United States. 


Completion of the transaction is subject to a number of conditions, including clearance by the Competition Bureau of Canada, the release of guarantees provided by Thomas Cook Group plc to third parties on behalf of TCNA and the release of guarantees provided by TCNA in support of the Group's financing arrangements. 


The transaction is expected to complete by May 31. Proceeds will be used to reduce the borrowings of the Thomas Cook Group.


Group chief executive Harriet Green said: "As we continue to drive the transformation of the Thomas Cook Group I am pleased to have reached agreement to divest our North American business, enabling us to focus on our core segments and future growth.


"The combination of TCNA's product portfolio and Red Tag's online presence form an attractive proposition for Canadian customers and we wish the team every success in the future."


TCNA employs 1300 full-time staff and is lead by CEO Dean Moore, who will transfer with the employees to Red Label.


The sale of its North America business is the first to be completed since Green announced her strategic review of the company last week.


At the time, she announced she was already involved in negotiations to sell several of Cook's brands, but refused to say which.


 

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