All options open as Thomas Cook launches review of airlines division

Postado Fevereiro 10, 2019

The company's willingness to sell its airline business reflects its commitment to its core growth strategy, with Thomas Cook eager to learn recoup losses it sustained a year ago in what was a challenging 12 months trading. Already back in 2008, a merger of Condor and Air Berlin was blocked by German competition authorities.

Alongside Thomas Cook's strategic review announcement was a trading update, which revealed consumer uncertainty is weighing on bookings for this summer.

The company will explore options for its airline branch "to enhance value to shareholders and intensify our strategic focus", a press release on Thursday said.

"However, it is clear that we need greater financial flexibility and increased resources to accelerate the execution of our strategy of differentiation: to invest in strengthening our own-brand hotel portfolio; further digitising our sales channels; and driving greater efficiencies across the business". As of December 12, 2018, the company operated an airline fleet of 101 aircrafts to 120 destinations.

"Our Group Airline delivered strong growth in 2018, despite facing industry-wide disruption". Finally, Morgan Stanley cut Thomas Cook Group to an "equal weight" rating and dropped their price target for the company from GBX 155 ($2.03) to GBX 60 ($0.78) in a report on Wednesday, January 30th.

"We carried over 20 million passengers and generated £3.5 billion in revenue, with underlying operating profits growing 37% year-on-year to £129 million". Credit Suisse Group dropped their price target on Thomas Cook Group from GBX 140 ($1.83) to GBX 108 ($1.41) and set an "outperform" rating for the company in a report on Thursday, November 15th.

In all, it operates 103 aircraft and posted a 37% rise in operating profit a year ago to £129m.

Thomas Cook's struggles are well known but it is now TUI's turn to feel the pain. The Group Airline continued to perform well, delivering a seasonal underlying loss in line with a strong comparative period previous year. For this summer, tour operator bookings are down 12 per cent although pricing was slightly higher.

Over the a year ago, the holiday specialist has encountered several issues, including consumer demand for sunshine package holidays being stifled by a scorching summer. Similarly, airline bookings are down on capacity reductions but average selling prices are up 6%, with higher yields in both short and medium-haul and long-haul.

Sky reported this morning that CEO of the group, Peter Fankhauser, said that "bookings for summer 2019 reflect consumer uncertainty, particularly in the United Kingdom".

Shares in holiday firms Thomas Cook (TCG) and TUI (TUI) are heading in different directions after the former unveiled a strategic review for its airline division, while the latter shocked the market with a profit warning.