Travel group Thomas Cook has revealed plans to cut more than 500 UK jobs after weak summer trading and the volcanic ash cloud disruption hit full-year profits.
The company said it expected to generate up to £50 million of savings by reducing the number of managerial and support staff in the UK, as well as renegotiating supplier costs and upgrading IT.
Good early-summer weather in the UK, the closure of European airspace in April and the weak pound all contributed to a 34% fall in UK adjusted operating profits to £107.5 million in the year to September 30.
Thomas Cook said growth in central Europe and Germany slightly offset the decline in Britain, with group revenues dropping 5% to £8.9 billion in the year, while adjusted, underlying pre-tax profits dropped 6% to £277 million.
Thomas Cook undertook a review of its UK workforce, which stands at around 13,000 to 15,000, to help combat uncertain economic conditions in the wake of public spending cuts.
Manny Fontenla-Novoa, Thomas Cook chief executive, said the actions would “simplify and streamline” the UK business, resulting in significant cost savings on an annualised basis.
“I am confident that the actions we have now taken to reinforce the UK business, together with continued progress on our strategic initiatives, leave us well positioned to make progress in the current year,” he added.
The group has also entered into joint ventures at home and abroad in a bid to broaden its customer base, including a move into the Russian market through a partnership with VAO Intourist and a merger of its high street travel business with the Co-op.
The deal with Co-operative Travel and the Midlands Co-Operative will create around 1,300 shops, and the newly-formed company will be the UK’s largest travel agent and second biggest in foreign exchange.