Thomas Cook financial woes
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Oh, I bought this morning when shares were cheap. I think if there's a time to buy, it's now.
It's a 'blip' - they won't recover the 75% straight away, but if you hold out 12 months - you might just be on to a winner. Even in the short term, it'll jump back up again once the bank discussions are over and concluded that the credit is more than fine.
It's a 'blip' - they won't recover the 75% straight away, but if you hold out 12 months - you might just be on to a winner. Even in the short term, it'll jump back up again once the bank discussions are over and concluded that the credit is more than fine.
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How many times these last few years I have said to colleagues "if I did my job as well as those in charge of running this company, we would be pulverised on a hillside a long time ago"
A simple but sad observation on this industry, and no doubt many others.
A simple but sad observation on this industry, and no doubt many others.
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The Markets always decide and they have decided Thomas Cook is no longer a going concern (hence share price of 10p). It would be extremely foolhardy to bet against market sentiment, there is a very good reason the markets have dumped all their shares at a huge loss - the company is bust.
Now, bad publicity will ensure TC's few remaining customers will be scared away and I am sure the company will fold by year end. Its a shame, and I wish my friends in the company good luck. Unfortunately this will not be the last charter operator to fold in the current storm, the business model is just flawed - I wander who will be left standing, probably just one charter group? TUI, maybe?
Now, bad publicity will ensure TC's few remaining customers will be scared away and I am sure the company will fold by year end. Its a shame, and I wish my friends in the company good luck. Unfortunately this will not be the last charter operator to fold in the current storm, the business model is just flawed - I wander who will be left standing, probably just one charter group? TUI, maybe?
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If I remember correctly they made £300m in profit in the last financial year (ending in September?). Real problem is cashflow and the near £1bn debt.
Funny how times change...
Sun shines on Thomas Cook bond issue | Mail Online
It's a familiar story these days. You can only sustain debt if the market has confidence in your ability to repay it. It doesn't take much to shake confidence and you're doomed. Governments or at least some are starting to understand but I'm not yet convinced the public does.
Funny how times change...
Sun shines on Thomas Cook bond issue | Mail Online
It's a familiar story these days. You can only sustain debt if the market has confidence in your ability to repay it. It doesn't take much to shake confidence and you're doomed. Governments or at least some are starting to understand but I'm not yet convinced the public does.
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Oh, I bought this morning when shares were cheap. I think if there's a time to buy, it's now.
The yield on their 7.75% bond has been rising since last april and I think it's around 14% now so the market has been nervous about their ability to repay for some time.
Last edited by cwatters; 22nd Nov 2011 at 22:43.
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I fear TC won't be the last of the 60/70's package tour companies to disappear in the next 10 years. Fundamentally the likes of Thomas Cook and Thompson are now competing with EZY and FR on 2-3hr short haul sun routes for 7/14 day holiday traffic and with their overheads they can't even hope to break even.
Years ago these far away destinations like Span, Greece, Portugal were considered a long way away (dangerous, full of foreigners you know
) and you needed the advice of an agent to get there and survive when you are there.
A high street shop in every town, agents on the ground in the resort, dedicated aricraft, helpers at the airport are all hangovers of this past travel era I'm afraid. With an emerging internet population and the incorporation of internet facing booking engines allowing the average joe to book a room for a fortnight pretty much anywhere in the world, what does the future offer for these old agent based travel companies? The under 30's of today with young families are far more worldy than their parents or grandparents and are much less likely to have to rely on an 'agent' for travel advice when they have the wisdom of the internet at their fingertips.
The tour companies recent survival tactic, in my opinion, is to compete with the locos (& their holiday arms) on the short haul holidays at a loss but to massively inflate the costs of long haul holidays to cover the massive overheads these business have. Looking at flights for 6hr + where they face little competition they are really rather expensive, more so than is necessary. The future, again in my view, is the full service carriers stepping into the breach to serve the longer haul destinations in direct competition with the holiday companies. This will be the death nail for the historical 'tour company' which we see hanging on today.
Years ago these far away destinations like Span, Greece, Portugal were considered a long way away (dangerous, full of foreigners you know
) and you needed the advice of an agent to get there and survive when you are there.A high street shop in every town, agents on the ground in the resort, dedicated aricraft, helpers at the airport are all hangovers of this past travel era I'm afraid. With an emerging internet population and the incorporation of internet facing booking engines allowing the average joe to book a room for a fortnight pretty much anywhere in the world, what does the future offer for these old agent based travel companies? The under 30's of today with young families are far more worldy than their parents or grandparents and are much less likely to have to rely on an 'agent' for travel advice when they have the wisdom of the internet at their fingertips.
The tour companies recent survival tactic, in my opinion, is to compete with the locos (& their holiday arms) on the short haul holidays at a loss but to massively inflate the costs of long haul holidays to cover the massive overheads these business have. Looking at flights for 6hr + where they face little competition they are really rather expensive, more so than is necessary. The future, again in my view, is the full service carriers stepping into the breach to serve the longer haul destinations in direct competition with the holiday companies. This will be the death nail for the historical 'tour company' which we see hanging on today.
Neil pretty much says it all, there will always be though the small independents who can supply something special which no one else can, or, the big boys are just not interested in. That particular villa on the Geek Island or specialist activities as an example.
Consolidation in the travel industry and more specifically among the tour operators makes for an interesting case study. The two big players Thomas Cook and TUI have chased the same mirage of industry domination which they expected to be followed by undreamed of levels of profitability.
In reality they have destroyed shareholder value to an extraordinary extent. Thomas Cook have a billion in debt, a massive fixed overhead retail chain, which they keep adding to....a bit like buying sailing ships in the age of steam! I wonder if Intourist and the Co-op have cashed in the TC shares they got in return?
Their airline fleet is in serious need of replacement. But how are they going to finance it? at least cost effectively. They do not have any money and any sensible leasing company is going to demand a punitive premium.
Now they announce they are effectively running out of cash. This is the travel industry equivalent of your doctor telling you he is under investigation for malpractice but not to worry he still has his license.
A big question for all of us indirectly involved is what impact will this have on their business partners. Air Berlin for example is already shaky. If Thomas Cook go down owing them a packet what happens? It could be like a house of cards.
Of course one man's loss is another man's gain and someone will step in like Airtours after the demise of ILG all those years ago. They of course morphed into Mytravel and many shaky years later are part of Thomas Cook. The song remains the same.
In reality they have destroyed shareholder value to an extraordinary extent. Thomas Cook have a billion in debt, a massive fixed overhead retail chain, which they keep adding to....a bit like buying sailing ships in the age of steam! I wonder if Intourist and the Co-op have cashed in the TC shares they got in return?
Their airline fleet is in serious need of replacement. But how are they going to finance it? at least cost effectively. They do not have any money and any sensible leasing company is going to demand a punitive premium.
Now they announce they are effectively running out of cash. This is the travel industry equivalent of your doctor telling you he is under investigation for malpractice but not to worry he still has his license.
A big question for all of us indirectly involved is what impact will this have on their business partners. Air Berlin for example is already shaky. If Thomas Cook go down owing them a packet what happens? It could be like a house of cards.
Of course one man's loss is another man's gain and someone will step in like Airtours after the demise of ILG all those years ago. They of course morphed into Mytravel and many shaky years later are part of Thomas Cook. The song remains the same.
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There is evidence of severe mismanagement here..
Remember that TCG's customers ALL pay in full 8-10 weeks before they depart.. no-one gets credit so there are no bad debts. TGC in turn (if they're like the other bucket n spaders) pay their hotels, typically, 3-12 months after their customers have returned home. How the hell can thay have cashflow issues if the business is run properly? IMHO they will be very lucky indeed to raise additional trading capital. Good luck to many fine employees all the same. TP
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They still exist thanks to people who can't be bothered booking it all themselves or are still duped into believing that a travel agent is always the cheaper way.
I personally haven't booked a package deal for a few years now and have no intention of doing so as a holiday where I stay in one hotel for 2 weeks no longer appeals to me at all. I think that's part of the problem too. As someone else said, many younger people are more adventurous and will put in the effort to go to places which my mum and dad would ahve considered obscure or just of limits in the 80s. While they spent their 20's jetting off to purpose built resorts in Spain or Greece and spending about £30 a week on food and drink, I'm spending mine in the likes of Tallinn, Cape Town or Toronto. These places were somewhat off the radar to most package dealers in those days and with the lack of LCCs, the likes of TCX could charge whatever they wanted to send people off boozing and sunbathing for a fortnight in the Med and rake it in. Low cost short haul and good value Long Haul flights are so abundant now, more people can go further "on their own" so to speak without the need for someone doing it all for them.
I have had a look at a few package deals in recent months just out of interest and all the stuff that used to be part of the package is now often treated as an add on extra, such as a meal on the plane, sitting next to one another, a transfer to/from the resort, even a bag on some package deals isn't included. These kind of things may make people think twice about booking an all inclusive package which actually excludes some basic things.
Add these things on to flight prices which are more expensive than an LCC, flight times which are not always favourable and higher prices in the Eurozone and it's no wonder that the package deal and those who offer them are losing appeal, at least on the short haul destinations.
I personally haven't booked a package deal for a few years now and have no intention of doing so as a holiday where I stay in one hotel for 2 weeks no longer appeals to me at all. I think that's part of the problem too. As someone else said, many younger people are more adventurous and will put in the effort to go to places which my mum and dad would ahve considered obscure or just of limits in the 80s. While they spent their 20's jetting off to purpose built resorts in Spain or Greece and spending about £30 a week on food and drink, I'm spending mine in the likes of Tallinn, Cape Town or Toronto. These places were somewhat off the radar to most package dealers in those days and with the lack of LCCs, the likes of TCX could charge whatever they wanted to send people off boozing and sunbathing for a fortnight in the Med and rake it in. Low cost short haul and good value Long Haul flights are so abundant now, more people can go further "on their own" so to speak without the need for someone doing it all for them.
I have had a look at a few package deals in recent months just out of interest and all the stuff that used to be part of the package is now often treated as an add on extra, such as a meal on the plane, sitting next to one another, a transfer to/from the resort, even a bag on some package deals isn't included. These kind of things may make people think twice about booking an all inclusive package which actually excludes some basic things.
Add these things on to flight prices which are more expensive than an LCC, flight times which are not always favourable and higher prices in the Eurozone and it's no wonder that the package deal and those who offer them are losing appeal, at least on the short haul destinations.
Sadly, I don't see TC or anybody in a similar position providing a service I need. As neil_2008 says above, the product is outdated.
I book all our holidays by buying the individual elements seperately which gives me a much wider choice of flight time & accomodation and at a better price.
I don't even know how Expedia and the like survive because I can usually beat them and always can match them.
The only person I know that uses a travel agent is a mate of mine who retired from ICI at 50 (15 years ago) and thus never got into the computer age and hasn't got the internet.
Life moves on .....
I book all our holidays by buying the individual elements seperately which gives me a much wider choice of flight time & accomodation and at a better price.
I don't even know how Expedia and the like survive because I can usually beat them and always can match them.
The only person I know that uses a travel agent is a mate of mine who retired from ICI at 50 (15 years ago) and thus never got into the computer age and hasn't got the internet.
Life moves on .....
Last edited by Dave Gittins; 23rd Nov 2011 at 16:15.
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Sadly, I have to agree with the above. In the internet age, travel agents, like High Street estate agents, must be an endangered species. It's not much fun being a pilot these days.
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The Media bashing and people on here with great views, clearly does not help the big problems they have.
This is the last thing the UK or our European friends need at this moment in time.
This is the last thing the UK or our European friends need at this moment in time.
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One issue, should there be a sudden collapse, is how many holiday makers are currently in their resorts? And of those, how many are covered by the ATOL bonding scheme?
The fund has taken a bashing over the past couple of years starting with Excel so would this be a challenge? (management speak for OMG
)
SGC
The fund has taken a bashing over the past couple of years starting with Excel so would this be a challenge? (management speak for OMG
)SGC
Well, it wasn't that long ago that Airtours was in the doo doo & many on here talked of its imminent collapse. However, it pulled through a tough time. Eventually merging with JMC to form TCX.
If the banks fear to lose more by pulling the rug, then it won't happen.
Thomas Cook is a pretty large organisation & the airline is only a small part. Like Airtours, they have plenty of other assets that could be disposed of first.
If the banks fear to lose more by pulling the rug, then it won't happen.
Thomas Cook is a pretty large organisation & the airline is only a small part. Like Airtours, they have plenty of other assets that could be disposed of first.