Continued from page, page 72


for the six months to March of a £1.1 billion write-down or ‘impairment of goodwill’ in its UK business “relating to the 2007 merger with MyTravel”. Tomas Cook’s survival now


depends on selling its airline to reduce its debt, following a review announced in February. Chief executive Peter


Fankhauser reported: “We have received multiple bids for the whole or parts of the airline business.” Luſthansa has confirmed it


has made an offer for German carrier Condor with an option to acquire the airlines in the UK and Nordics. No other bidders have been confirmed, although Virgin Atlantic is reportedly interested in the UK airline. Fankhauser also confirmed


Cook has been granted a new £300 million financing facility by “our leading banks” to provide “bridging finance” through next winter. Tis will be available from October 1, but its availability “is dependent on progress” in selling the airline. A spokesman confirmed:


“Te airline review is the key focus for the business.” Te carrier needs to sell at


a high-enough price to restore Cook’s finances. Analysts suggest bids could


range from £650 million to above £1 billion, but a high price seems unlikely in Cook’s difficult circumstances. An industry source also


noted: “Te complicated part of the sale is that the airline has a close relationship with the tour operator.” Te airline, which is


profitable, accounted for 40% of group revenue in the six months to March. Its loss would leave a much-reduced group.


Cook posts £282m loss and writes down £1.1bn


Ian Taylor


Tomas Cook reported a dramatic rise in winter losses to £1.45 billion last week and issued a fresh profits warning for the remainder of the year. A “goodwill impairment” of


£1.1 billion on the residual value of the group’s merger with MyTravel in 2007 accounted for most of the increase on the loss of £303 million a year earlier.


Te headline loss obscured the


fact that Cook reported trading broadly in line with the market as its half-year operating loss rose year on year by £68 million to £282 million. UK tour operating losses


increased by 25% to £103 million for the six months, with margins under pressure “given the level of competition and the uncertainty surrounding Brexit”. Tomas Cook reported the winter


2018-19 season closed with group bookings up 7%, but with average selling prices down 9%. It reported “challenging trading”


for summer 2019 with tour operator bookings down 12%, “broadly consistent” with capacity cuts, and average selling prices up 2%. But it reported: “Te continued


competitive pressure is puting further pressure on margins.” Te group no longer reports


Thomas Cook merged with MyTravel in 2007


Fankhauser warns unprofitable shops will be closed


Peter Fankhauser, Tomas Cook chief executive, warned of further cuts to the business, especially in retail, following the group’s poor half-year results. He said: “A range of cost


efficiencies are planned for the second half of the year. We need to sharpen our focus on being efficient especially in retail stores.


70 23 MAY 2019


booking figures by market. However, it said: “In the UK, the political uncertainty related to Brexit has


“We are following our customer


behaviour and the more [who] are into digital, the more we have to follow this trend. We review our retail network constantly and if a store falls below profitability, we are closing those shops.” Tomas Cook announced a


redundancy consultation with 100 staff at its head office in Peterborough last week. Fankhauser said: “We are


reviewing and streamlining our operations. If you are closing shops, you have to adapt your head office.” Cook currently operates 580 UK shops, less than half the number


12% Year-on-year drop in Cook’s summer 2019 tour operator bookings


led to soſter demand across the industry. We have seen no tangible change to booking paterns since the announcement of a delay to Brexit.” Chief executive Peter Fankhauser


reported “an uncertain consumer environment across all our markets”, saying: “Tere is now litle doubt the Brexit process has led many UK customers to delay their holiday plans.” Yet he insisted: “We have made


good progress on our strategy of differentiation. We are well advanced in our aim to build our position as one of the leading sun and beach hotel companies in Europe. In the last two months alone we’ve opened 12 new own-brand hotels.”


the group controlled following its retail merger with Te Co-operative Travel in 2011. Fankhauser said: “[Having] 1,222


shops in today’s world isn’t the best. We are focusing on retail efficiency.”


travelweekly.co.uk


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