Thomas Cook rivals’ surge

THOMAS Cook’s collapse provided a lift for shares in rivals, including a £350million boost to tourism giant TUI, as investors bet on an easing of pressure on profit margins squeezed by Europe’s fiercely competitive travel market.

Shares in TUI, which offers package holidays, flights and cruises, jumped 60¾p to 901½p, while other beneficiaries included budget airline easyJet, up 49p to 1106½p, and Dart Group, 34½p higher at 880p, which owns tour operator Jet2holidays and airline Jet2.com.

Thomas Cook had an estimated 8 per cent of the UK tour operating market and 10 per cent in Germany.

Tour operators and airlines have been forced to cut prices to remain competitive in a market with too much supply, while the likes of Monarch and Air Berlin have failed.

Thomas Cook, which had £1.6billion debt, followed after failing to secure an extra £200million of funding and the Official Receiver was called in.

Business Secretary Andrea Leadsom demanded a fast-tracked investigation to look at whether “any action by directors has caused detriment to creditors or to the pension schemes”.

The Pension Protection Fund said it would assess the funding levels of the company’s retirement schemes.

Thomas Cook’s pension schemes have a surplus of £100million above the levels needed to secure PPF benefits.

AJ Bell investment director Russ Mould said: “Ultimately Thomas Cook failed because it didn’t have the cash flow to reinvent itself to fight off growing competition as so much money was going on debt repayments.

“It struggled with very thin profit margins, high levels of competition, rising fuel prices and large borrowings. It also had expensive stores on the high street to maintain and leasing fees on aircraft.

“Despite having 22 million customers, the business only made £250million underlying earnings before interest and tax which equates to about £11 a customer.”

He added: “That’s barely anything given the amount of effort involved to run its business and market its holidays.”