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World’s oldest travel firm in $1.3B rescue


‘Stay of execution’ for Thomas Cook: travel analyst

Travel giant Thomas Cook Group has confirmed it is in “advanced discussions” with its biggest investor, China’s Fosun Tourism Group, over a £750 million (AU$1.34 billion) bailout of the company. 

 

Assuming it goes ahead, the rescue deal will see Fosun effectively take control of the beleaguered company, which is considered the world’s oldest travel agent and tour operator. 

 

Image Getty

 

Thomas Cook Group CEO Peter Fankhauser said that while the recapitalisation of the business isn’t ideal, it would allow the company to continue trading - at least in the short term.

 

“While this is not the outcome any of us wanted for our shareholders, this proposal is a pragmatic and responsible solution which provides the means to secure the future of the Thomas Cook business for our customers, our suppliers and our employees,” he said. 

 

According to GlobalData Travel & Tourism Analyst Johanna Bonhill-Smith, Thomas Cook had no choice but to undergo radical change and “consider any deal that was put on the table”. 

 

“Ultimately, Thomas Cook is in the position it is because its business model has not majorly evolved since it first began as a typical all-inclusive package holiday tour operator,” she said. 

 

“It has failed to adopt strategies to counter the threat of disruptors such as Airbnb and change is now a necessity for the company to succeed.” 

 

 

With a deal at providing “a stay of execution” for the group, Ms Bonhill-Smith said “cultural clashes due to business norms or an overriding strategy could mean the deal causes more problems than it solves”. 

 

“Fosun sees value in the traditional tour operator because of its strong brand and global image and is confident of a return on its investment, provided it can impose its preferred operating strategies,” she remarked. 

 

Among potential “radical changes” for the group, Bonhill-Smith Fosun said Fosun could encourage Thomas Cook to focus more on online bookings, “causing even more job cuts and future store closures”.

 

According to Thomas Cook, bookings for its summer 2019 programme are “slightly ahead of the same period last year”, but tour operator and Thomas Cook airline bookings are down 9% and 3% respectively.

 


Published: 15 July 2019


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