Thomas Cook is to pay a dividend to shareholders for the first time in five years as it seeks to draw a line under a troubled period for the travel company.
Shares rose 6.5% as the company described the payout as a “milestone” moment.
The travel industry has endured a year blighted by terrorism attacks in Europe and political instability in Turkey. Thomas Cook has also attempted to rebuild its reputation and change the culture of the business, after last year’s inquest jury verdict of unlawful killing in relation to the the deaths in 2006 of two children from carbon monoxide poisoning during a holiday on the Greek island of Corfu.
The travel company reassured consumers it did not expect the sharp fall in the value of the pound since the Brexit vote to make foreign holidays more expensive in the year ahead, and as a business it benefited because two-thirds of its revenue is made in other currencies.
Peter Fankhauser, the company’s chief executive, said that while it had been a tough year for the tourism industry, Thomas Cook had responded swiftly to challenges, switching to providing more holidays in Spain when demand plunged for destinations in Turkey.
The company said it would pay investors a dividend of 0.5p a share, reflecting a confidence in strategy and a second consecutive year of profits.
“It is modest but it is the first we’ve paid in five years and it is a milestone for the business. In what’s been a difficult year for tourism, it feels like Thomas Cook has come a long way in the last 12 months,” Fankhauser said.
Pre-tax profit dipped to £42m in the year to 30 September from £50m a year earlier, while revenue was roughly flat at £7.8bn. He said the shock outcome of the UK’s EU referendum had not had a noticeable impact on trading.
Sales of holidays to Turkey halved over the year, and Fankhauser said the early signs for the summer 2017 holiday season were that customers were still favouring Spain and Greece, as well as longer-haul destinations including the US and Cuba.
He said the company was changing its culture by focusing on providing a better service for customers following the deaths of Bobby and Christi Shepherd, aged six and seven, at a hotel on Corfu booked through the travel company. The siblings died from carbon monoxide poisoning caused by a faulty boiler.
A report commissioned by the company and published a year ago by the former Sainsbury’s boss Justin King found that Thomas Cook had prioritised cost cuts over customers. The inquest jury said Thomas Cook had breached its duty of care to the children and their family.
Fankhauser said on Wednesday: “We learned the hard way what happens when you don’t put the customer at the heart of the business.
“Right across our business we’re making customers’ experience of our holidays better. By focusing on fewer hotels, we can have a bigger influence on quality and service, whether that’s a promise to fix any issues within 24 hours or the reassurance of regular checks on health and safety standards.”
Summer 2017 bookings within its UK business were up 2%, and the company said it expected to remain profitable in the year ahead, maintaining market current expectations.
“We’re taking a cautious approach to the year ahead. We’ve had an encouraging start to bookings for summer 2017 in our key markets, but it is early days,” Fankhauser said.
Thomas Cook said Condor, its German airline, would make a full-year loss of £10m as a result of weak demand, especially for Turkey.
Analysts at Stifel, said that overall it was an encouraging update, adding the shares had good recovery prospects.
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