Thomas Cook has confirmed a £91m loss for Q4 2011, up £54 million on the £37m loss declared for the same period in 2010.
Despite this, the company maintained it was ‘on track’ to make £35m in cost savings over the current financial year which, it says, will ‘offset the headwinds faced from a weaker consumer environment.’
The company said it has already started the consultation with airline staff in relation to the planned reduction in aircraft to reduce fixed lease, maintenance and staff costs. It has also cut the number of hotels with which it is working.
Sam Weihagen, group chief executive at Thomas Cook, said in the business’s mainstream operations, the group had managed capacity down to focus on margins which has led to less summer holidays left to sell.
He explained: “We continue to take costs out to help offset the reduction in capacity and our UK turnaround plan is key to that.
“Our strategy is to reduce the number of our hotels and increase unique and differentiated products. Differentiated product bookings are up 7 per cent and we are on track to reach our target of 25 per cent of differentiated product bookings for mainstream for Summer 2012.”
The group’s turnaround plan also includes plans to integrate its pricing models across its distribution channels with reduced discounting and improved sale pricing.
In addition, the company has said its Hotels4U, Medhotels and Neilson brands are performing well, with the embattled Gold Medal brand recovering under new management.
Nick Hood, head of external affairs at Company Watch said the announcement of significantly increased losses highlights the many problems facing the business.
He explained: “It has held on to market share, which is commendable, but in a shrinking market, badly impacted by collapsing consumer confidence and falling disposable incomes.
“This company has been in our warning area consistently since 2008 and currently has a financial risk rating of only 7 out of a maximum of 100.
“It will take more than the sale of its Indian business to restore this iconic but ailing company to more robust financial health. Doubts about its ability to avoid being broken up will continue for the foreseeable future.”
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