Thomas Cook has experienced severe trading difficulties and some restructuring is inevitable. In 2011 Languedoc visitors used flights to Toulouse from Belfast, Bristol, Gatwick and Manchester ...
Second largest European travel group Thomas Cook (founded in 1841 when a UK vicar organised a day trip to a temperance meeting, but now German owned) has experienced a huge drop in bookings. The company sold 22m package holidays in 2010. After announcing 3 profit warnings this year the share price has dropped 93% since January to a low of £0.12 (including 75% this week - Monday close was £0.41).
Despite a slight recovery this morning, news that the company is renegotiating bank loans of around €1bn sends shudders throughout the travel industry.
Travel companies typically have negative winter cash flow, switching to positive flows in spring. The drastic reduction in bookings suggests that Thomas Cook will need additional borrowings to survive, as well as favourable renegotiated terms on existing loans.
Bookings have fallen due to the recession, tightened credit facilities, fears surrounding the "Arab spring", collapse of the pound over the last couple of years, UK loss of feel good factor, and fears for the euro.
The global long term trends of self booking travel via the internet and taking fewer but shorter breaks has compounded the problems. It is almost inevitable that Thomas Cook will reduce its UK network of retail outlets, further accelerating the disappearance from the high street of traditional travel agencies.
Other travel companies are expected to make announcements.
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