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Cash-strapped Thomas Cook puts airline business up for sale
TRAVEL group Thomas Cook said on Thursday it was willing to sell its airline business to raise cash and fund its fight back from a torrid 2018 and signs of a tough 2019 ahead.
The oldest travel company in the world was brought to its knees in 2018 when a heatwave in northern Europe deterred holiday makers from booking lucrative last-minute deals, leading to two major profit warnings and talk of a need to raise funds.
The British group said rather than launch a rights issue, it would consider all options for the most successful part of the business to enable it to invest in its own hotels, improve its digital sales offering and drive further cost savings.
"We are at an early stage in this review process which will consider all options to enhance value to shareholders and intensify our strategic focus," chief executive Peter Fankhauser said in a statement.
The Group Airline consists of Germany's Condor, and UK, Scandinavian and Spanish divisions. In all, it operates 103 aircraft and posted a 37 per cent rise in operating profit last year to £129 million (S$226 million).
Thomas Cook said it had made progress in managing its cost base, but bookings for this summer reflected consumer uncertainty, especially in Britain.
Last year's winter trading was also affected by the long hot summer, with fewer customers willing to book holidays, meaning that average selling prices were down 10 per cent. For this summer, tour operator bookings are down 12 per cent although pricing was slightly higher.
Its underlying loss from operations in the three months to the end of December expanded to £60 million.
Net debt stood at £1.6 billion and it said it had met its bank covenant tests. The group had a market valuation of £478 million at the close on Wednesday.
It reiterated its full-year outlook.
The airline business fared much better than the tour operator segment last year, and grew its profit by £35 million. The tour operator business profit fell £88 million. REUTERS