Thomas Cook shares tumble after shock exit of chief executive Harriet Green
- Credit: PA
The boss of travel group Thomas Cook announced her surprise depature today after two years in which she has overhauled the once-troubled company.
Harriet Green, who is stepping down as chief executive with immediate effect, said her work at the company was done after returning it to a sound financial footing. She will be replaced by chief operating officer Peter Fankhauser.
Thomas Cook’s current stock market value of just under £2billion compares with £148million when she took the helm in July 2012.
Ms Green said: “I always said that I would move on to another company with fresh challenges once my work was complete. That time is now.
“I wish all of the team at this re-energised company continued success, as they move to the next phase of the company’s development.”
The announcement came as Thomas Cook posted underlying earnings of £323m for the year to September, an increase of 44% on a year earlier.
However, Thomas Cook shares slid by as much as 20% following Ms Green’s announcement and a warning from the company that growth in the current financial year will moderate due to tougher trading conditions, which have particularly affected its German and French markets.
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Under Ms Green’s leadership the company cut costs through the closure of shops, as well as through the sale of hotels and reduction in its airline fleet. She took charge after the travel operator was forced to turn to its banks for an additional £200m of loans to stay afloat.
Thomas Cook chairman Frank Meysman said: “Harriet has had a highly positive impact on this company. We emerge from her transformation stronger, with a clear strategy, world-class leadership team, updated brand, and a renewed focus on the customer.”
Ms Green joined the company from Leeds-based technology distributor Premier Farnell, where she was chief executive.
Mr Fankhauser has been with Thomas Cook for 13 years and his success in turning around the UK business led to his promotion to chief operating officer in November last year.
Leisure analyst Mark Brumby of Langton Capital said the achievement of the group’s full potential may take a little longer than shareholders had hoped.
He added: “It won’t be revisiting the dark days of 2012 in a hurry but 2014 has provided something of a reminder as to just how volatile an industry leisure travel can be and Ms Green’s exit perhaps serves to remind us that smooth marketing needs to be overlaid with real work on the fundamentals.”
Cost and profit improvements under Ms Green’s turnaround plan now amount to £400m and should rise to more than £500m by the end of this financial year.
The company added: “We have de-risked our business by reducing low profit and high risk operations, through business disposals, strategic reductions in risk capacity in France and Russia, and the removal from sale of low quality product.”
The strategy reduced full-year revenues by £727mn to £8.6bn, with the stronger pound and lower demand for Egypt among other factors.
It offset some of the sales shortfall by generating £186 million in revenues from new products, such as the roll-out of more exclusive holidays.
Including restructuring costs, Thomas Cook recorded a full-year loss of £114 million against a deficit of £163 million a year earlier.
The company said UK bookings for this winter have increased significantly with volumes 5% higher than a year ago and average selling prices up 1%. Bookings in France are 15% lower with prices 3% higher.