A file picture taken in Oberursel, Western Germany, on February 1, 2007, shows Manny Fontenla-Novoa, former CEO of travel and tourism group Thomas Cook. Thomas Cook's chief executive resigned on Wednesday August 3, 2011.MARTIN OESER/AFP/Getty Images
Travel firm Thomas Cook said chief executive officer Manny Fontenla-Novoa is stepping down, following a spate of profit warnings and a steep drop in the company's share price since the start of the year.
Mr. Fontenla-Novoa was criticized by analysts and investors after the group issued a profit warning in July, its third in 12 months, as tough conditions in Britain and unrest in the Middle East and North Africa hit trading.
The value of Thomas Cook shares has dropped by two-thirds since January, but Mr. Fontenla-Novoa, who has been CEO since 2007, told Reuters only last month his own position was not under pressure.
Numis analyst Wyn Ellis said the CEO's departure was expected after the company's latest profit warning.
"It was inevitable that the CEO had to go," the analyst said. "It is fair to say Thomas Cook has disappointed under his regime, but it is never good for a company when a CEO leaves under such circumstances," Mr. Ellis added.
Sam Weihagen, deputy to the chief executive, will take on the role of interim CEO of the 170-year-old firm and the hunt for a permanent successor was already under way.
Shares in Thomas Cook, Europe's second-biggest travel firm, rose more than 5 per cent to 63.9 pence on Wednesday following Mr. Fontenla-Novoa's departure. Rival TUI Travel's shares were up 0.33 per cent.
Separately, Thomas Cook said underlying operating profit for the third quarter fell 22 per cent to £20.1-million ($31.6-million). The company said the impact of unrest in the Middle East and North Africa region for the quarter was estimated at £25-million and it expects a similar effect in the fourth quarter.
Peel Hunt analyst Nick Batram said although the company's trading position was no worse than the most recent profit warning, today's news "will not encourage many buyers," despite Mr. Fontenla-Novoa's departure.
In July, Thomas Cook said the Middle East and North Africa impact had been heavier than anticipated, with its French business seeing reduced demand and lower margins during the peak season for key destinations in Egypt, Morocco and Tunisia.
On Wednesday, it confirmed full-year profit would be lower than it previously expected at £320-million. It also reiterated plans for a strategic review of its United Kingdom business and an asset disposal program to raise up to £200-million.
Thomas Cook, which has about 750 travel shops in the U.K., has said around two thirds of the full-year profit shortfall was because of a continued squeeze on disposable incomes in Britain.
British consumer sentiment fell in July towards the two-year low seen earlier this year, fuelling concerns that consumers will continue to cut spending and hamper the fragile economic recovery.