Weakness in European Airlines as expected - Further reducing value at Thomas Cook

All,

This should further highlight the desire of creditors to keep TCG as one Group in the immediate future. Fosun will want to carve out the Tour Operator for their capital injection but creditors should remain cognisant that Fosun are the only likely buyer long term so allowing majority control to be lost at this stage makes the realisation of value for a minority stake in the future more difficult.

Results from Ryanair (yesterday) and Lufthansa (today) have outlined the further weakness in the European short haul market, especially in Germany and Austria. Yields in Europe, particularly in Germany and Austria, remain under pressure because of market-wide over-capacities, aggressive competition and increasingly price sensitive demand. This pressure was well flagged but points to a bumpy road for value realisation from the Airline segment of Thomas Cook.
Coupled with the weakness in European Airlines, Sterling weakness is another nail in the TCG coffin. The weak pound makes it more difficult to sell holidays in the “lates” market, further depressing earnings for FY19.
But perhaps a bigger question should be - Is anyone willing to inject £750m in fresh capital into TCG?