Business

Thomas Cook chief resigns saying her work 'is complete'

CEO Thomas Cook Harriet Green Image copyright Thomas Cook
Image caption Thomas Cook boss Harriet Green is to step down after just two years in the job

Thomas Cook chief executive Harriet Green has resigned, saying her work at the travel firm "is complete".

Shares in the travel company plunged more than 17% in reaction to the news. The company also warned of tougher market conditions in the coming year.

Ms Green will be replaced by chief operating officer Peter Fankhauser, who will take over with immediate effect.

Harriet Green joined the company two years ago when its share price was 14p. It closed on Tuesday night at 139.9p.

Ms Green said: "I always said that I would move on to another company with fresh challenges once my work was complete. That time is now."

As expected, the company reported a 44% jump in earnings before interest and tax to £323m ($507m) for the year ended September.

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However, it warned that growth in the coming year would be slower due to a tougher trading environment.

'Huge shock'

Ms Green's decision to step down took the markets by surprise.

In a tweet, BBC business editor Kamal Ahmed described the news as a "huge shock".

Shares were trading around 110p on Wednesday morning. In March they reached a high of 190p.

Brenda Kelly, chief market strategist at IG Markets, said: "The resignation is bound to have a negative effect.

"But there are other problems out of Thomas Cook's control. Over the last few months the market has not looked so good - with the weaker UK currency and a struggling eurozone all having a negative effect."


Analysis: Kamal Ahmed, Business Editor

The travel industry has gone back to one of their own.

Harriet Green - new to the travel business - took over Thomas Cook when it was on its knees, fixed it at a whirlwind pace and has left, I am sure, earlier than she thought she would.

Her replacement is a travel sector veteran who has been at Thomas Cook for 13 years, including when it suffered its near death experience in 2011. Before that he was at Kuoni.

Although Ms Green has always made it clear that being a long haul chief executive was not for her (she told the BBC last year "I generally think [chief executives] spend far too long in the same business") her abrupt departure points to some tensions in the business that could not be reconciled.

The chairman, Frank Meysman, said this morning that Thomas Cook now moves into a "fresh phase" where the strategy put in place by Ms Green is executed by her successor. "Everybody has their qualities," he said this morning.

That suggests that the board felt that the new chief executive, Peter Fankhauser, is better suited to running the business.

Investors are voting with their wallets over the departure of a chief executive who saw the share price rise by nearly ten times in two years. Since the announcement of her resignation at 7am, the shares have collapsed by more than 20%. Chief executives who transform businesses are clearly valued.


Company rebooted

Thomas Cook underwent a thorough reorganisation under Ms Green that reflected new trends in the travel business.

"Her great achievement was to restructure the company, realising that having so many Thomas Cook outlets around the country was based in history not reality," said Ms Kelly.

"She recognised that people were going on line and looking for deals, that holiday booking tradition was different from Thomas Cook's heyday in the 70s and 80s.

"It meant huge closures here in the UK and in Ireland, but those difficult decisions meant getting to grips with what's happening today in the travel market," according to Ms Kelly.

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