Thomas Cook on track to hit profit target despite Corfu deaths backlash

Travel operator Thomas Cook said it is on track to reach its target of turning a profit by the end of 2015, despite severe challenges.

The company reported it was able to cut its pre-tax losses by 17.2% to £303m (€423m, $469.4m) in its half-year results, despite an 8.9% decline in revenue.

Apart from fighting its way out of an enormous debt, Thomas Cook is facing backlash after a court ruled the company "breached its duty of care" in 2006 after two children died from carbon monoxide poisoning in a hotel in Corfu.

The company has since paid the compensation of £1.5m it had received from the Louis Corcyra Beach Hotel in Corfu to Unicef, without consulting the children's parents, who have been supporting a different children's charity.

People turned to social media to encourage others to boycott Thomas Cook earlier in May when it was reported that the company allegedly received a much larger sum in compensation than the parents.

"The markets will be looking for what the company has to say over the recent bad press following the 2006 deaths in Greece and the compensation debacle," Will Hedden, dealer at London Capital Group, said. "Any possible customer backlash following the Greek-related compensation debacle may take until next year's numbers to show, with this summer's bookings likely to be already locked down by consumers."

Thomas Cook reported it managed to reduce its net debt by £37m to £700m and said it sold 62% of its summer programme to date, 2% higher than 2014.

In an effort to target China's growing tourism market, the company made a deal with Chinese investment group Fosun International Limited, which acquired 4.8% of the company, worth £92m.

Thomas Cook chief executive Peter Fankhauser said the new deals made with several other companies helped achieve positive results.

"Overall the group has made positive progress during the first half. Thanks to the actions we have taken, both profits and like-for-like revenues have grown, and debt has been further reduced," he said.

The company cut dividends in 2011 but said it expected to resume dividend payments over the results achieved in 2016.