22nd Jun 2012

New CEO at Thomas Cook

Harriet Green is due to take the helm next month at troubled tour operator Thomas Cook. Green comes to the travel business as an industry outsider, having had a successful career in electronics, most recently as CEO of electrical components company Premier Farnell.

Her appointment as chief of Thomas Cook is one of a number of bold moves the 171 year old travel company has made lately as part of a concerted attempt to pull itself back from the brink of disaster. In addition to hiring Green it is also replacing its chief financial officer Paul Hollingworth, who steps down after negotiating a 3-year funding deal worth £1.4 billion – its third refinancing in a year. Last month it also sold its Indian business for £94 million to Fairfax in an effort to reduce its debt.

The firm’s search for a new CEO has taken almost a year, and it was a year in which the situation at Thomas Cook went from bad to worse. The company has posted a loss of £398 million for the financial year 2010-2011.

Part of the blame for all this must go to the European debt crisis and its knock-on effects, which have hurt businesses across Britain and the continent. And the recent political developments in North Africa had the incidental effect of putting tourism in much of the region on hold, which further squeezed the profit margins at Thomas Cook.

These larger developments have, however, only served to point out a more basic weakness in the firm’s business model. If Thomas Cook is going to prosper again, it’s going to have to learn how to powerfully drive sales through its ebusiness.

That will be Harriet Green’s challenge, and it’s the reason her experience at Premier Farnell is likely to be key to her contribution at Thomas Cook. She has been largely credited with Premier Farnell’s change from catalogue to  web-based business. Ecommerce now accounts for half of group sales. Green will be tasked with bringing off a similar change at Thomas Cook.

But times have changed, and Green will be operating in a tougher environment, where she faces expectations of immediate performance acceleration. Frank Meysman, Thomas Cook’s chairman, was quoted in the Telegraph on the subject of the terms of its new chief’s contract. He said: “We gave her a fair contract. The notice period is six months. I don’t think it’s fair, even at the top levels, that people obtain a twelve month notice period… I’m a strong believer that you pay for strong performance and you don’t pay for non-performance. That’s what the whole debate around the Shareholder Spring is about – why the heck do you pay for non-performance?”. Green will need to make an impact, and early.

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