The TTG Analysis


How Cook can fly high again


With the £200 million loan facility in place, Rob Gill looks at what Thomas Cook now has to do to get the business back on its feet


to see it through to the end of the year. In many ways the hard work is only just starting now that its short- term cash problems are behind it with a new £200 million loan facility. New chairman Frank Meysman,


T


who takes over from the retiring Michael Beckett today (December 1), certainly has a full in-tray – at the top of which must be the appointment


homas Cook still faces a “tough and painful time” despite securing the extra funding the company needs


of a new chief executive to replace Manny Fontenla-Novoa. Interim boss Sam Weihagen has been stressing that it’s been “business as usual” since dropping its funding bombshell on November 22. But the negative publicity has taken its toll on Cook’s UK bookings which slumped by 30% last week. The company’s results are now scheduled to be released in the week starting December 12 when the industry will also get the first insights into the company’s restructure of its struggling UK division. This is expected to include closing 200 shops and shedding 1,000 jobs following the retail merger with The Co-operative Travel. Cook’s longer-term challenge is


THOMAS COOK: IN NUMBERS


£10m 200 15%


Cost of new loan


Number of UK shops likely to close


£320m 19,000


£180m 10 01.12.2011


Planned reduction in UK aircraft


Expected underlying


operating profit in 2011


Cook’s UK staff


Value of all Cook’s shares


to reduce the debt which has got it into these difficulties in the first place. It has agreed to sell more assets in addition to the £200 million it had


The UK downturn has hit family holidays


already been trying to raise – mostly through disposing of its hotels. Analyst Nick Batram, of Peel Hunt, estimates that Cook’s net debt will peak at around £2 billion this month when you include the deficit in its pension fund.


“My view is that there has to be Chairman takes on challenge


Frank Meysman takes over as Thomas Cook’s chairman at one of the most challenging times in the company’s 170-year history. Meysman (right) was appointed in September to replace Michael Beckett, who is retiring from the board, and has been chairman- designate since October 1. The Belgian national, aged


59, has worked in executive roles for major consumer brands such as Procter & Gamble, Douwe Egberts and the Sara Lee Corporation where he was executive vice-president and a board director until 2003. Since leaving Sara Lee, Meysman has been a non-executive director, including chairman, of several public and private international companies.


Thomas Cook launches national ad campaign • Cook reassures customers after 30% decline in bookings Cook sees shares plunge by two-thirds • Cook must restore trust in travel, says McEwan • Cook in talks


COVERSTORY


a recapitalisation of the business,” he told TTG. “Part of this business, MyTravel went through something similar in 2002. But what it showed was that you could resolve the situation. It takes time and it’s painful but the company can come through this.” Fellow analyst Douglas McNeill, of Charles Stanley, said reducing Cook’s debt would be an issue for the “middle to latter part of next year” as finding a new chief executive and restructuring the UK business were more urgent concerns. “I think we will see a shrinking of the UK business but the decline will happen gradually,” he told TTG. “Not having a permanent chief


executive in the last few months has not hindered the company as they have a seasoned industry hand in charge – albeit on a temporary basis. But to move forward they require a permanent appointment who will need a bit of time to get his or her feet under the desk.”


cover dec1 29/11/11 18:45 Page 1 INTELLIGENCE


Discounting may help turn north Africa around, p16


01.12.2011 TOOLKIT


Single pleasures on a Just You weekend, p33


TTG VIRTUAL


Counting down to the Caribbean show, p46


FEATURES


Agents sample buzzing Bermuda on a fam, p49


ttgdigital.com £3.00


Ready to rise again?


Cook fights back and vows to come out stronger after week of turmoil p3, 4-5 & 10-11


Double trouble APD set for double inflation increase in April, p5


The river cruise wave Agents take to the canals in Amsterdam, p12


Lux living New Indian Ocean brand revealed, p20


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