TOUR AGENCY

Tour agency

Tour agency

Section 1

Thomas Cook Group (TCG) is one of the leading leisure travel groups in the world. It offers package tours, holiday components and services. The group primarily operates in Europe and the Americas. TCG is headquartered in London, the UK and employed 31,097 people as of September 30, 2011. The group recorded revenues of £9,808.9 million ($15,763.9 million) during the financial year ended September 2011 (FY2011), an increase of 10.3% over FY2010.The increase in revenue was primarily due to modest volume uplift, price increases and revenue contributions from the acquisitions during FY2011.The operating loss of the group was £266.6 million ($428.5 million) in FY2011, as compared with an operating profit of £167 million ($226.4 million) in FY2010.

The net loss was £520.7 million ($836.8 million) in FY2011, as compared with a net loss of £2.6 million ($3.5 million) in FY2010. Thomas Cook Group offers charter packages (two or more components of travel such as flights, hotels, transfers and representative services are bundled together), independent travel management, and travel-related financial services (pre-paid foreign exchange, travel assurance and travel finances).

The group manages its operations in 22 countries through six geographic operating divisions: the UK, Central Europe, West and East Europe, Northern Europe, North America and Airlines Germany (Wise, 2010). Its operations are supported by a fleet of 93 aircraft and a network of over 3,784 owned and franchised travel stores. The UK segment includes the group's operations in the UK, Ireland, India and Middle East. The segment operates 1,103 retail outlets and 40 aircrafts offering services to over 7.8 million customers. The group operates in this segment under Thomas Cook, Neilson, Club18-30 and Direct Holidays brands.

The Central Europe segment comprises businesses in Germany, Spain, Austria, and Switzerland. The segment operates 1,348 retail outlets and covers 4.1 million passengers under Thomas Cook, Neckermann, Sentido, and Bucher brands. The West and East Europe segment comprises of operations in Poland, Slovakia, Hungary, Belgium, Netherlands, France, and Czech Republic.The segment operates 1,076 retail outlets, seven aircrafts and covers 3.2 million passengers under Thomas Cook, aquatour, Neckermann, and Jet Tours brands (Cohen, 2000, 65).

Break-Even Analysis

The following table details TCG's break-even analysis, including monthly Sales break-even points. Break-even calculations assume a 20% Gross Margin. This is a conservative estimate, and it will be improved as strategic relationships develop and the benefits of TCG's offerings are realized by customers.

Break-even Analysis

Monthly Revenue Break-even

$33,902

Assumptions:

Average Percent Variable Cost

78%

Estimated Monthly Fixed Cost

$7,375

Master Budget

TCG's profit picture improves as operations progress into the third quarter of the first year of operation. ATI anticipates improving its gross margin from 22% in year one to 23% in year two. Annual estimates of profit and loss are detailed in the following table.

Section B

Thomas Cook Group (TCG) recorded revenues of £9,808.9 million ($15,763.9 million) during the financial year ended September 2011 (FY2011), an increase of 10.3% over FY2010. For FY2011, the UK, the company's largest geographic market, accounted for ...