Thomas Cook aims to make annual savings of up to £50 million through a range of measures, including consolidating its IT infrastructure.
The travel agents said it expects to generate overhead savings of £40 million to £50 million in 2012 mainly through the upgrade of its IT infrastructure, renegotiation of supplier costs and reduction in buying requirements. It is also cutting more than 500 managerial and support roles.
Thomas Cook decided on these strategies after reviewing its UK operations due to the “challenges experienced in the UK this year” and an “uncertain outlook”.
According to its preliminary results for the year ended 30 September 2010, the company’s group profit was down six percent to £391 million compared with last year (£415 million), on revenues of £8.9 billion. Its revenue had also fallen by four percent, and Thomas Cook said its increases in profits from Central Europe and Airlines Germany were not enough to offset the UK decline. Its UK operations’ profit was 24 percent down on last year, to just £124 million, partly due to low demand in the summer.
Thomas Cook also revealed that its net expenditure on fixed assets and intangibles had increased, some of which was due to greater investment in its IT programme and its online travel agency proposition.
“We have taken further actions to simplify and streamline our UK business, which will result in significant cost savings on an annualised basis, helping to mitigate input cost pressures and any further deterioration in the trading environment.
“We are 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,” Thomas Cook said in a statement.
In September, the group agreed terms with Capgemini to move its IT to an Infrastructure as a Service (IaaS) model.