Daily Mail

Debt fears mount for Thomas Cook

- By James Bur­ton Business · Stocks & Markets · Investing · Financial Markets · Finance · Thomas Cook · Belgium · Belarus · Iceland · United Kingdom · Barclays · On the Beach · Co-op Atlantic

ShareS in trou­bled Thomas Cook crashed again amid fears over its £389m debt moun­tain.

The hol­i­day group’s stock fell another 21.5pc, or 6.46p, to a sixyear low of 23.64p – tak­ing losses since May this year to 84pc.

The slump has slashed the travel com­pany’s value from £2.2bn in May to just £364m – less than the size of its debt.

and Thomas Cook looks likely to be ejected from the FTSe 250 in­dex of mid-cap com­pa­nies.

a fire sale by fund man­agers, who are only al­lowed to hold FTSe 250 stocks, is thought to have been partly re­spon­si­ble for the fall.

Beren­berg an­a­lyst Stuart Gor­don has down­graded the stock to a ‘sell’ rat­ing and warned Thomas Cook shares are ‘un­in­vestable’.

he said it may have to raise more cash on the stock mar­ket and that the price could fall as low as 12p, a fur­ther drop of al­most 50pc.

Thomas Cook was pum­melled by the sum­mer heat­wave, with many fam­i­lies choos­ing to stay in Bri­tain rather than trav­el­ling abroad. More con­cern­ing still is its mount­ing debt pile, which has bal­looned from £40m to £389m in just 12 months.

Last week boss Peter Fankhauser said: ‘2018 was a dis­ap­point­ing year for Thomas Cook, de­spite achiev­ing some im­por­tant mile­stones in our strat­egy for trans­form­ing the busi­ness.’

Laith Kha­laf of trad­ing firm har­g­reaves Lans­down said: ‘It’s clearly been a pretty hor­ri­ble year for Thomas Cook in­vestors. If you’ve got a busi­ness that has a fair amount of debt on the bal­ance sheet, a trad­ing slow­down can be par­tic­u­larly puni­tive.

‘The Christ­mas trad­ing sea­son is go­ing to be im­por­tant.’

Thomas Cook is 176 years old, in­vented the pack­age hol­i­day and has around 22,000 staff sell­ing hol­i­days to get­aways rang­ing from Lan­zarote to La­p­land. But the com­pany has been forced to is­sue two profit warn­ings in re­cent months and in­vestors are con­cerned about its fu­ture.

There are fears that tra­di­tional tour op­er­a­tors could be swept away by in­ter­net dis­rup­tors as more and more peo­ple look for niche hol­i­days on­line.

In­ter­net travel agent On the Beach, which is listed on the aIM ju­nior stock mar­ket, is now worth £180m more than Thomas Cook, de­spite only launch­ing in 2004.

Thomas Cook swung to a £163m loss in the year to Septem­ber 30, down from a £9m profit for the pre­vi­ous 12 months.

The busi­ness shut 100 shops in a battle to cut costs, just two years af­ter buy­ing them as part of a £55.8m deal with Co-op Travel.

The store clo­sures are thought to have af­fected about 600 staff.

There are even calls to break the busi­ness up, with Bar­clays an­a­lysts sug­gest­ing its air­line should be hived off from the tour op­er­a­tor arm.

any money raised could then be used to pay down debts. The Bar­clays an­a­lysts added: ‘With con­cerns around the UK econ­omy, earn­ings may con­tinue to dis­ap­point.’

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