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Group airline sale 'paused'

Group airline sale 'paused'

Cook said the change of tack resulted from the strategic review of its group airline announced in February and “subsequent approaches” for its tour operator, with Fosun understood to have been among those vying for a significant stake in Cook.


“Since commencing the review, the operating environment in the European travel market has become progressively more challenging,” said Cook. “This has impacted the group’s underlying financial position and its ability to execute a disposal of the airline or the tour operator, either in whole or parts, in a way which returns satisfactory value to the group and its stakeholders.


“As a result, the board has concluded it is in the best interests of all the group’s stakeholders to pursue a full recapitalisation of the group supported by new investment into the business. The strategic review of the group airline is paused, pending the outcome of the recapitalisation.”


Cook added the plan would “ultimately replace” a £300 million rescue facility agreed with its lenders in May, which would have become accessible in the event of selling its airline.

'It's not the outcome any of us wanted'

'It's not the outcome any of us wanted'

Peter Fankhauser, Thomas Cook chief executive, said: “After evaluating a broad range of options to reduce our debt and put our finances onto a more sustainable footing, the board has decided to move forward with a plan to recapitalise the business, supported by a substantial injection of new money from our long-standing shareholder, Fosun, and our core lending banks.


“While this is not the outcome any of us wanted for our shareholders, this proposal is a pragmatic and responsible solution which provides the means to secure the future of the Thomas Cook business for our customers, our suppliers and our employees.”

Margins 'weak' due to heavy discounting

Margins 'weak' due to heavy discounting

Cook said its summer 2019 programme is 75% sold, “slightly ahead” of where it was last year. Group tour operator bookings are down 9%, albeit with pricing up 2%.


The operator says while it has seen a “marked improvement” in bookings in recent weeks, “margins remain weak due to continued intense competition” and “high levels of promotional activity across all businesses”.


Group airline bookings are down 3%, again, with pricing up 2%. Excluding capacity reductions across its tour operation, Group airline bookings are up 11%, which Cook said reflected greater sales to third-party tour operators, particularly in Germany, and general improvements in seat-only business in all markets.


“Looking forward, it is clear the trends experienced in the first half of the year have continued into the second half, reflecting an uncertain consumer environment particularly in the UK, leading to intense competition,” said Cook. “As a result, the group expects underlying Ebit [earnings before interest and tax] in the second half to be behind the same period last year.


“The group is helping mitigate these challenges with a rigorous focus on cost, while remaining fully focused on delivering a stronger holiday offering to customers through high quality, higher-margin hotels, underpinned by a digital focus and market-leading innovation.”


Cook’s third quarter trading update scheduled for Thursday (18 July) has been cancelled.

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