Originally Posted by
newfoundglory
What has shocked me is some of the news articles i have read today, including claims that Thomas Cook had to sell 3 million holidays per year just to service the interest on its £1.7bn debts. I have no idea whether that is true or not. And of course not forgetting the 500+ high street shops.
I know nothing about running a business, but this seemed like an impossible problem.
Probably not unrealistic to be fair.
There are a lot of companies out there with mega debt and they are just able to pay the interest to keep going. Often referred to as "The Walking Dead" because they will ultimately go bust in all probability, it is just when.
The fact that interest rates have been at record lows for 10 plus years have helped BUT when you get to a stage of desperately needing to borrow because debt is too high then you will be paying 15-20% interest on the debt at a minimum.
Not the fault of the employees or even the board as they will be 3rd or 4th board since original debt was taken on.
It is not a nice thing to say but it will be said and that is,
The end of TC will help the survival of quite a few other companies because capacity will be taken out of the market and prices will go up.