Thomas Cook: welcome to the “total wipeout tour”
Stitched-up package-holiday tourists “know the routine”, said Alistair Osborne in The Times. They arrive at their hotel to find the sea view’s a building site and the pool is “frogspawn green”. But Thomas Cook shareholders are on an “even worse vacation” oddly absent from the brochure: the “near-total wipeout tour”. Investors have seen the share price crash from 140p last May to just a few pence. And under the latest rescue plan, they could now lose everything – even their “trunks”.
The 178-year-old business is in talks with its biggest shareholder (the Chinese conglomerate
Fosun) and lenders about a £750m cash injection, followed by a £1.6bn debt-for-equity swap. This could end up with the Chinese company taking control of the business, said Rob Davies in The Guardian. It’s not a done deal, though: it could be blocked by bondholders, who will want to see a convincing turnaround plan. The key issue is that the company has buckled under its “mindboggling” £1.6bn debt pile, said Ben Marlow in The Sunday Telegraph – a legacy of the disastrous merger with the Co-op’s travel agency in 2011, which saddled Thomas Cook with 1,200 high-street shops just as online bookings began to boom.
It wouldn’t be a British summer without a travel firm getting into trouble, said Matthew Lynn in The Daily Telegraph. But Thomas Cook, which practically invented mass tourism in the Victorian era, is different. It has survived two World Wars, nationalisation, takeovers, break-ups and multiple reorganisations (Robert Maxwell was a big shareholder for a time). Alas, the truth is that its business model (assembling a “bunch of stuff” on behalf of consumers who lacked access themselves) was probably doomed “from the day the first web browser was launched”. Let’s just hope that its Chinese bidder can keep it alive in some form.