Thomas Cook slashes jobs
October 29, 2001FRANKFURT. Six weeks after the September 11 terrorist attacks, German travel group Thomas Cook backed up a downbeat outlook with a radical new cost-cutting program, which will include the loss of around 2,650 jobs.
Thomas Cook, Europe's second largest travel company behind German rival Preussag, expects a 15% drop in sales for its 2002 business year – a development that it sees burdening its net earnings result by some 530 million euros.
Hopes that job cuts will offset revenue decline
In this it stands in contrast to its main competitor, Preussag AG, which forecasts continued sales growth next year. But with the cost-cutting initiative, Thomas Cook is hoping that its earnings before tax and goodwill write-downs will remain at this year's level, estimated by Thomas Cook chairman Stefan Pichler at around 160 million euros.
Pichler announced that his group, which formerly traded as C&N Touristic, is set to shed 2,650 full-time positions, or one tenth of its workforce. Pichler said that management posts will be lost, while capacities are set to be lowered by 16–17% with the closure of approximately 100 retail outlets.
Meanwhile, a Preussag spokesman said that his company sees no reason cut costs and capacities, reaffirming the message of Preussag chairman Michael Frenzel that customers "quickly return" following a crisis.
Germans have become less travel-friendly
But there has been a discernible slump in the numbers of Germans booking holidays since the terrorist attacks on New York and Washington. According to figures compiled by Germany's leading booking system, Amadeus, reservations for package tours in Germany have plummeted 15% over the past month.
It is against this backdrop that one should read Pichler's forecast of a clear decline in sales revenue next year. He stressed that Thomas Cook, which is owned 50-50 by German retail giant KarstadtQuelle and national airline Deutsche Lufthansa, will be able to up capacity if the travel industry sees a surge in demand.
But he added that there was currently no sign of any return to normal by the market. Both Preussag and Thomas Cook expect to reach their respective sales targets for full-year 2001, despite the downturn in trade since September 11.