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Thomas Cook : What went wrong for the 170-year-old company?

ByInternational Business Times
Published 11/23/2011, 08:01 AM
Updated 05/14/2017, 06:45 AM
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Thomas Cook, the second biggest travel company in Europe is facing a period of turmoil as the holiday bookings are significantly low. Factors like the political unrest in Middle East, eurozone debt crisis and flooding in Thailand have ad-versely affected the financials of the company.

Thomas Cook shares have recorded a 75 percent fall on Tuesday which added up to a total of 95 percent decline in the stocks over a year. The company is currently looking for a revision of loan conditions with the lending banks. Earlier it had negotiated a £100 million extra credit from the banks.

Lloyd’s Banking Group is the biggest equity holder with 8.96 percent stake in the 17-member bank lending group. The company is relying on the support of the banks to tide over the present crisis. Now the company is valued at just £89.3 million with £900 million debt.

The 170-year-old travel company has 22.5 million customers in 21 countries and owns brands like Neilson, Club 1830, Alba Tours and Neckermann Reisen. The problems of the Thomas Cook is largely seen as the result of a number of reasons like the difficult market conditions to competitions in the travel industry with that of a much larger rival TUI Travel.

About 200 stores of the travel company are facing closure, adding to its woes. Thomas Cook had recently merged with the Co-Op's travel stores which had added considerable overheads to the business. Analysts are expecting no further improvement in the holiday bookings because of the inclement weather in the coming months.

Meanwhile, the company has been forced to delay its full-year results because its auditors cannot sign it off as a "going concern,” reports The Tele-graph.

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