Thomas Cook Group on the Brink (A, B, and C Cases)

HBS Case Studies No. 215-008 (A Case), 215-051 (B Case), and 215-052 (C Case)

Posted: 30 Sep 2016 Last revised: 31 Oct 2016

See all articles by Benjamin Esty

Benjamin Esty

Harvard Business School

Stuart C. Gilson

Harvard Business School - Finance Unit

Aldo Sesia

Harvard Business School

Date Written: March 10, 2016

Abstract

When Harriet Green became CEO of the Thomas Cook Group (TCG), the venerable U.K.-based travel services company, in July 2012, the firm was in distress: it had lost £600 million in the last three quarters and its stock price had fallen from 230p to 9p over the last two years. Green, an industry outsider, quickly needed to design and implement a turnaround plan to save the company. Rather than fixing TCG’s over-leveraged balance sheet, which would only prolong the decline, Green decided to start with a strategy-led turnaround aimed at fixing the company’s structure and operations. Only after the turnaround was underway did she want to restructure the firm’s balance sheet. This approach, however, was risky as the firm headed into the critical fall trading season when the firm had to pre-buy hotel and airline capacity before selling that capacity as packaged vacations in the winter. Green announced her turnaround plan — known as the “13 Big Decisions” — in September 2012, approximately six weeks after joining the firm. The key questions facing investors, employees, and other stakeholders were: was this the right plan, was she the right person, and, ultimately, would the plan work?

This case has three pedagogical objectives. First, it illustrates the process of “taking over.” In particular, it describes what Green did in her first 45 days as CEO of TCG. Second, it illustrates a large-scale restructuring/turnaround plan that entails both financial and strategic transformations. Third, it allows students to analyze not only the content of the restructuring plan, but also the process used to implement the plan. The B and C cases describe what happened during the first and second years after the turnaround plan was put in place. The sequential nature of the cases allows students to analyze the plan's execution and to see its results over time.

Keywords: Leadership, Turnaround, Restructuring, Change Management, Taking over, Crisis Management, Cash Flow, Financial Management, Value Creation, Business Strategy

JEL Classification: G30, G34

Suggested Citation

Esty, Benjamin C. and Gilson, Stuart C. and Sesia, Aldo, Thomas Cook Group on the Brink (A, B, and C Cases) (March 10, 2016). HBS Case Studies No. 215-008 (A Case), 215-051 (B Case), and 215-052 (C Case), Available at SSRN: https://ssrn.com/abstract=2845547

Benjamin C. Esty (Contact Author)

Harvard Business School ( email )

Boston, MA 02163
United States

Stuart C. Gilson

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
(617) 495-6243 (Phone)
(617) 496-8443 (Fax)

Aldo Sesia

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
617-496-2085 (Phone)

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