Thomas Cook CEO Harriet Green departs as growth outlook clouds over

Thomas Cook chief executive Harriet Green has stepped down after little more than two years in charge of the troubled travel group, claiming her turnaround "was complete", though the company was more cautious on next year's growth expectations.

Green, who was appointed in July 2012 after 'cold-emailing' chairman chairman Frank Meysman to tell him "you need me", will be replaced by chief operating officer Peter Fankhauser with immediate effect.

The company presented the departure as amicable and praised Green's role in its turnaround, having made 2,500 job cuts and removed 195 high street stores during her tenure, and delivered a strong set of results in the year to end-September.

Although revenue was down 8% due to disposals, exits from unprofitable business and foreign exchange translation, underlying gross margin improved by 10 basis points to help underlying operating profit (EBIT) rise 23% to £323m and underlying earnings per share more than double to 11.3p from 5p. At the statutory pre-tax line, including restructuring costs and impairments, Thomas Cook made a £114m loss.

Net debt was cut by £95m to £326m thanks to free cash flow more than doubled to £116m.

"I always said that I would move on to another company with fresh challenges once my work was complete. That time is now," Green said, despite having indicated previously that she expected to stay for much longer.

But the company took a more pragmatic tone when it admitted the tougher trading environment meant the growth outlook for the next financial year was "more measured" than had been expected, and that "there is more to do" in the turnaround as it was "just two years into our major change programmes".

Wave 1 cost savings target for the new financial year have been increased from £460m to £500m, with Wave 2 in 2017/18 remaining at £400m, which may disappoint some analysts.

Yet Meysman agreed that Green had "a highly positive impact" on the company, with its market capitalisation having soared from £148m to over £2bn during her time in charge.

"We emerge from her transformation stronger, with a clear strategy, world-class leadership team, updated brand, and a renewed focus on the customer.

"The succession plan she devised will now take effect and the new chief executive, Peter, will drive the company forward as we focus on winning the commercial battle against other operators."

Fankhauser was promoted to COO last November after leading the much-improved UK business as CEO and has twenty years of experience in the travel market, most recently from managing and growing the European division and overseas business of Kuoni.

Analysts at Shore Capital said the results were "broadly inline" with expectations, with EBIT in line but Thomas Cook had missed a number of its performance targets, notably new product revenue, web penetration and sales compound annual growth rate, although a number of others have been met or exceeded.

"Turning to summer 2015, the only comment is that the UK is 23% sold, with bookings +8% and prices 1% higher, we are slightly concerned that other than stating that Concept Hotel bookings for summer 2015 are +43% yoy there is no additional commentary on summer booking trends."

Chris Beauchamp, market analyst at IG, said Green arrived when the company was in the departure lounge and trading at 14p, and she leaves it in a "much sunnier disposition".

"Investors will be right to ask questions over how her departure will affect the turnaround plan, so expect much of the price reaction today to be in connection to this.

"The other issue is the turnaround plan – the warning that growth will be more moderate (i.e. slower) in the coming year is a sign that the easy bit has been done. Expectations of further improvement are now baked into the price, although the signs of growth at the newly-improved web platform should provide a useful growth engine."