Thomas Cook interim chief hits out at predecessor's errors

By ROB DAVIES FOR THE DAILY MAIL
Updated: 17:25 EST, 14 December 2011

Thomas Cook’s interim boss slammed his predecessor’s errors, as he conceded a savage round of jobs cuts may not be the last.

The tour operator posted a £398m loss, after taking a £428m hit on the plunging value of its brands and businesses.

A revamp of its 170-year-old British operation aims to boost profit by £110m a year by closing 200 shops, at the cost of 1,000 jobs.

The overhaul will usher in a focus on more niche and ‘exclusive’ businesses, rather than the traditional package holiday.

Interim boss Sam Weihagen would not rule out fresh job cuts but said the cost reduction plan would give the company a grace period to get its new strategy off the ground.

Weihagen pulled no punches in his assessment of the failings of the previous regime, which ended when Manny Fontenla-Novoa left after a string of profit warnings.

He said the renaissance of Thomas Cook (down 0.3p to 14.52p) would involve unpicking the web woven by a string of acquisitions under Fontenla-Novoa. ‘Making acquisitions adds a lot of complexity to the organisation and maybe previous management didn’t give enough attention to that complexity and we saw the results…when trading got difficult.’

He said another blunder had been giving shops the power to offer customers discounts without the approval of head office.

Weihagen said this had ‘not been a very good system for steering [profit] margins,’ and unveiled plans to cap the discount staff can offer at their discretion.

He said there was no legal way to claw back the £15m Fontenla- Novoa earned in four years, but wants to recoup cash from failed executives and also refused to rule out expanding a £200m asset sale.