May 18, 2019

Thomas Cook faces tough task to fly itself out of trouble

Thomas Cook celebrated its 175th anniversary three years ago by selling £175 holidays. Two questions hang over chief executive Peter Fankhauser as he aims to reduce debt and turn the company round: can Thomas Cook sell its airline at a price that will save its balance sheet and, without the airline, in what shape will the company survive? The company hopes the airline sale will clear its £1.2bn net debt, but analysts estimate bids could range from £650m to £1.3bn. One source briefed on the sale process said offers were likely to be lower than Thomas Cook expected, as it was a forced seller and its slots were not the most desirable. If the airline sale goes through at a higher price, Thomas Cook said it would push further into the hotel market, with an aim to double profits in its own-brand offering by 2021. Thomas Cook aims to grow its number of own brand hotels from 200 to 250 and increase the proportion that are directly managed by the company - as opposed to franchised - from 15 to 30 per cent, to boost margins.

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