The woes of giant travel-agencies-of-yore continue...
Travel firm Thomas Cook said it would cut 2,500 jobs from its UK workforce and close 195 stores in Britain as part of its plans to restructure the business.
The 172-year-old group has struggled over the last two years with a slump in sales leading to a string of profit warnings, forcing it to renegotiate bank loans and make disposals to cut debt.
Most of the job losses would be within its retail network and in back-office and administrative positions, and would involve the closure of 195 of its 1,069 UK stores, said the world’s oldest travel group, which has a total workforce of 15,500 in the UK and Ireland.
Thomas Cook said jobs at its head offices at Peterborough in east England and Preston in the north west were at risk, while its Accrington office, also in the north west, would likely be shut. It also plans to change the terms and conditions of some employees to cut more costs.
“We firmly believe these proposals will mean a better, more profitable, Thomas Cook that continues to be a major employer in the UK,” said Thomas Cook UK & Ireland’s chief executive Peter Fankhauser.
Travel firms and airlines across Europe have seen bookings fall over the last two years, hit by the euro zone debt crisis, high fuel costs and social and political unrest in popular destinations such as Greece, Egypt, Tunisia and Morocco.
Thomas Cook has been hit particularly hard by tough trading conditions in Britain where its core customer base of families with young children has been affected by the economic downturn.
Since travel industry outsider Harriet Green took over as CEO last May, the company has seen a steady improvement in its finances following a series of disposals to slash its debt, including the sale of its Indian business and several Spanish hotels.
Earlier this week Thomas Cook said it had decided not to sell its under-performing French business and would instead kick off a restructuring program to turn the unit around.
Thomas Cook last month reported reduced first-quarter operating losses and said its turnaround plan was on track.
Shares in Thomas Cook, which have risen 78 percent so far this year, were 0.3 percent up at 85.6 pence by 7.25 a.m. ET, valuing the business at around 777 million pounds.
(Reporting by Rhys Jones; editing by Paul Sandle)
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Photo Credit: A worker changes the window display of Thomas Cook in Loughborough, central England December 14, 2011. Darren Staples / Reuters