Thomas Cook puts airline business up for sale to raise cash

By Alistair Smout

 

The Thomas Cook logo is seen in this illustration photo January 22, 2018. REUTERS/Thomas White/Illustration

 

LONDON (Reuters) - Travel group Thomas Cook said on Thursday it was willing to sell its airline business to raise cash and fund its fight back from a torrid 2018 and signs of a tough 2019 ahead.

 

The oldest travel company in the world was brought to its knees in 2018 when a heatwave in northern Europe deterred holiday makers from booking lucrative last minute deals, leading to two major profit warnings and talk of a need to raise funds.

 

The British group said rather than launch a rights issue, it would consider all options for the most successful part of the business to enable it to invest in its own hotels, improve its digital sales offering and drive further cost savings.

 

"We are at an early stage in this review process which will consider all options to enhance value to shareholders and intensify our strategic focus," Chief Executive Peter Fankhauser said in a statement.

 

The Group Airline consists of Germany's Condor, and UK, Scandinavian and Spanish divisions. In all, it operates 103 aircraft and posted a 37 percent rise in operating profit last year to 129 million pounds.

 

Thomas Cook said it had made progress in managing its cost base but that bookings for this summer reflected consumer uncertainty, especially in Britain.

 

Last year's winter trading was also affected by the long hot summer, with fewer customers willing to book holidays, meaning that average selling prices were down 10 percent. For this summer, tour operator bookings are down 12 percent although pricing was slightly higher.

 

Its underlying loss from operations in the three months to the end of December expanded to 60 million pounds.

 

Net debt stood at 1.6 billion pounds and it said it had met its bank covenant tests. The group had a market valuation of 478 million pounds at the close on Wednesday.

 

It reiterated its full-year outlook.

 

The airline business fared much better than the tour operator segment last year, and grew its profit by 35 million pounds. The tour operator business profit fell 88 million pounds.

 

(Reporting by Alistair Smout; Editing by Kate Holton/Keith Weir)

 

-- © Copyright Reuters 2019-02-07

Debt £1.6 billion. 

Market valuation £478 million. 

 

I think that is a financial situation, known in technical circles as "Donald Ducked"? 

Much more pain ahead when money tightens up after Brexit. If you are a shareholder you have to be concerned when management decides to sell the more profitable portion of the business. Seems the share price has dropped 90% in the last dozen years.

11 hours ago, pegman said:

Much more pain ahead when money tightens up after Brexit. If you are a shareholder you have to be concerned when management decides to sell the more profitable portion of the business. Seems the share price has dropped 90% in the last dozen years.

How do you know what will happen after Brexit? Brexit has never been done before so no one knows. Previous predictions by Bank of England and IMF have all proved to be wrong yet you seem to be in the know. I suggest your statement should be prefixed with 'I predict'. However, I agree this mostly German-owned company is not in good shape and in general high street travel agents are in decline.