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Thomas Cook Retail Head Resigns

Thomas Cook LogoThe UK head of retail at Thomas Cook has become the most recent of the troubled company’s executives to resign. Ian Derbyshire’s exit comes after 11 years of working with the group but is part of a removal of senior management at the debt-burdened tour operator’s British business in Peterborough. It’s understood that the 43-year-old is resigning in order to join the children’s activity business operated by his family in the north-west of England.

Thomas Cook investors have become more frustrated with the company’s management after the group posted lower-than-expected profits, while an increasing debt has left the business struggling to honour banking agreements. Experts think a December covenant test may be especially tight. It also emerged last week that Michelle MacMahon, a new divisional finance director, found £21 million in receivables in the company’s accounts that are unlikely to be recovered and should be written off. This has added to worries over the British unit.

All of this is happening at a time when the group is expected to complete a merger with the high street travel shops in the Co-operative network. The group says that Derbyshire’s resignation was decided earlier in the year, but he agreed to stay at least until this merger is finalised. He will be replaced by the group’s current online travel agency head in the UK, Simon Robinson, who will also head the Co-operative merger when it’s completed in October.

The group is also continuing its extreme review of all aspects of its British unit, getting help from KPMG, the management consultant firm. Finance director Paul Hollingworth, who is said to be leaving the company as well, said last week that one of the measures they are considering is a more than 10% reduction of its 41-strong aircraft fleet in the UK during the next 18 months. They are looking at cutting the span and breadth of the range of product they offer in the country.

Derbyshire’s departure also comes after the abrupt resignation of Thomas Cook chief executive Manny Fontenla-Novoa just last week amid their third profit warning for the year. The 61-year-old has been replaced by Sam Weihagen, who has been the head of the group’s Scandinavian business for nine years. Weihagen had actually been due to retire later this year. Aside from this, chairman Michael Beckett has announced his retirement in six months, while other directors at the UK business that will go include two divisional heads.

In contrast to what’s going on at Thomas Cook, rival TUI Travel has reported better-than-expected figures for the past nine months through June, though it’s still in the negative. Shares in the rival company rose earlier this week after reporting strong sales from its UK and Nordic businesses. The group has been selling more to couples who don’t have children or to those who don’t have children living at home anymore.

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