The sodden British summer has come to the aid of embattled holidays operator Thomas Cook by boosting sales in the UK “lates” market. In fact, the third quarter trend across all the group’s markets in Europe looks reasonably encouraging, with bookings falling less than reductions to the number of holidays that the company has on offer. Nevertheless, the three months saw Cook make an underlying operating loss of £26.5m compared with a profit of £20.1m last time, much of which reflects higher fuel prices.
Perhaps most significant, though, are the growing reasons to think that a new management team could get to grips with the business’s problems. Progress has been made suring up the group's tattered balance sheet through a series of disposals and an assessment of Thomas Cook's future is underway. Harriet Green, who became chief executive late last month, hopes to have a plan of action by the spring.
While trading is likely to remain tough, Thomas Cook's share price could show major upside if a credible plan to improve the group’s long-term financial position and performance can be hatched and implemented. Against this lingers the risk that the level of debt could force management to turn to a dilutive equity fundraising.
