Thomas Cook shares plummet on debt Worries

This morning Thomas Cook share price has fallen sharply after the announcement that it has suffered a “deterioration of trading in some areas of the business” and is in talks with its lenders to secure additional loans to cover operating costs.

Currently Thomas Cook is seeking a further £100 million just 32 days after already receiving the same amount. Thomas Cook has no defaulted on any loans and has said that it just wishes to raise more capital for improved cash flow. Its CEO, Sam Weihagen, says that Thomas Cook is robust business with a great future.

Thomas Cook has approached partners in commercial airspace to sell its stake in National Air Traffic Services (NATS) to raise around £60 million.

The Arab Spring has affected Thomas Cook badly as many of its popular holiday destinations are in Tunisia and Egypt. Thomas Cooks owns many hotels and provides package holidays to this region which are usually very popular for those seeking winter and late Spring sunshine.

Also the severe flooding in Thailand caused a huge fall in demand for trips to one of its most lucrative regions.

The Eurozone crisis has also resulted in a downturn in demand for European holidays to Greece as well as many other popular destinations. Travel to France and Belgium has also reduced. Many families are starting to cut back on holidays abroad, instead remaining in the UK for a “staycation” rather than spend limited household funds on family holidays.

Currently Thomas Cook’s net debt stands at £900 million, which consists of an existing £150 million loan and £850 million credit facility.

Overall a combination of political unrest, natural disasters and the economic downturn has contributed to Thomas Cook’s bad year.

Share price has now fallen 67.04% this morning and by 95% from its high point in January 2011.

Thomas Cook is not the only travel company to suffer, Tui shares have also fallen by around 67% this year.

Thomas Cook have delayed issuing their annual results until the discussions with its lenders are concluded, but do state that “The Company expects to report a headline operating profit for the year ended 30 September 2011 broadly in line with previous guidance” (Source: www.thomascookgroup.com)

Thomas Cook share price graph for 2011

Thomas Cook shares 2001. Source: Google Finance

  1 comment for “Thomas Cook shares plummet on debt Worries

  1. SHP
    November 23, 2011 at 3:56 pm

    Thomas Cook shares have risen by 17.18% so far today as investors feel more confident about its future. After yesterday’s panic selling the full details of their debt problems have emerged and the plans to tackle this also, which has improved market confidence. After closing yesterday at 10.20p they are now at 11.91p.

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