Thomas Cook

[Brum X]

This really is so sad and heart wrenching 😢

 

[Scottie Dog]

Based in the initial ACL report for W19/20 TCX was apparently offering 905,041 seats from Manchester. It will be interesting to see how much of this will be filled by other carriers. It certainly looks as if the 30m target will take a little longer to be reached.

 

[User1007]

Based in the initial ACL report for W19/20 TCX was apparently offering 905,041 seats from Manchester. It will be interesting to see how much of this will be filled by other carriers. It certainly looks as if the 30m target will take a little longer to be reached.

That looks like 6.3% of total capacity for the Winter, they had around 10.4% for the summer according to the ACL report.

 

[User1007]

They haven't made any announcement as far as I can see, but Jet2's timetable is showing extra flights to Antalya and Dalaman for October. Thomas Cook were the biggest operator to the Turkish resorts from Manchester and I think the UK as a whole. Looks like they're adding stuff to the Canaries as well.

 

[David_itl]

The BBC has been reporting on the inquiry and put this on their website .View attachment 15053

How much is due to direct sales and what is holiday related i don't know.View attachment 15053

 

[Jamman]

Interesting that the airline side was doing OK but still no one wanted to take it over, were they ran as separate businesses?

 

[EGCC_MAN]

Interesting that the airline side was doing OK but still no one wanted to take it over, were they ran as separate businesses?

There were bidders for the airline operations. Over many months TCG employed consultants to run a bidding process with a view to selling the airline, leaving the less-indebted group free to develop the hotel and tour operating side of the business. But the big problem which arose was that TC's airline operations were so diverse. Long-haul, short-haul, divisions in the UK, Scandinavia, Germany, Spain (Balearics) etc. Bids reportedly came in for specific divisions of the airline but there appeared to be limited interest in buying out the whole operation. TCG also reportedly included clauses at the time which would effectively oblige new owners to accommodate group demand for holiday flights essentially on their own terms. A new owner, whilst likely happy to work with TC, would presumably want full control.

Names mentioned as expressing interest during that process included Virgin Atlantic (for the long-haul division). Hence no surprise at their interest in the void left behind now. How much better it would have been all round had that offer been accepted. Staff, continuity, assets. Another bid reportedly came in for the whole of TC's Scandinavian operation. Lufthansa was reported as expressing interest in Condor. Other names cropping up were Indigo Partners (I may have the name slightly wrong there?), Wizz and Hi-Fly. The process wasn't conducted in public, so there could have been other bidders. But clearly, much of the airline could have been sold off and saved. Interest was there.

In the end, TCG decided to run with an offer for the whole group from existing minority shareholder FOSUN INTERNATIONAL, a HK / Chinese company best known in Europe as operator of the Club Med brand. This would keep the group together. But EU ownership rules dictated that Fosun would need to bid as part of a larger consortium including various banks, funds and bondholders which would limit Fosun's own direct control to the permitted percentage (49%???). Putting this deal together proved horrendously complex and time-consuming, it dragged on endlessly. All the while with TCG hemorrhaging losses. In the end, demand for additional bank guarantees came in and time just ran out.

Pity the board decided against allowing the group to be broken up at an earlier stage. Some divisions have survived ... Condor, Scandinavia. But so much more could have been saved.

 

[User1007]

The airline was profitable from selling most of its seats to the holiday business for a price that division couldn't make money on. If someone had bought the airline, would it still be operating after the rest of Thomas Cook went under, leaving it flying empty planes?

 

[EGCC_MAN]

The airline was profitable from selling most of its seats to the holiday business for a price that division couldn't make money on. If someone had bought the airline, would it still be operating after the rest of Thomas Cook went under, leaving it flying empty planes?

Probably not. This is one of the reasons that the airline attracted more interest from parties bidding for specific divisions of it rather than for the whole. The bid for the Scandinavian division was for the entire operation there including the tour division - so the risk you identify was offset in that case. Thomas Cook long-haul didn't depend solely on holiday sales - Virgin knew this market well when they submitted a bid - and they could tap into Virgin Holidays too. And we all knew that if the Virgin bid had succeeded some subsequent consolidation at MAN would have been inevitable. Long-haul would have been scaled to viability. Meanwhile, the Lufthansa interest in Condor was supported by synergies specific to them.

Of course, Thomas Cook strategy was based upon the hypothesis that proceeds raised from selling the airline could be used to offset debt from the balance sheet, thus safeguarding (or just buying time?) for the tour operating / hotel property divisions to prosper. We cannot know what sums were bid for the various TC airline divisions. But I do wonder whether potential buyers perhaps offered low-balled 'distressed' bids (for the best bits of the airline) which didn't resolve anything from the perspective of Thomas Cook themselves. We will probably never know for sure. But it is telling that TCG management backed the impossibly complex Fosun - Banks / Funds consortium as their best option in the final analysis.

 

[pholling]

Probably not. This is one of the reasons that the airline attracted more interest from parties bidding for specific divisions of it rather than for the whole. The bid for the Scandinavian division was for the entire operation there including the tour division - so the risk you identify was offset in that case. Thomas Cook long-haul didn't depend solely on holiday sales - Virgin knew this market well when they submitted a bid - and they could tap into Virgin Holidays too. And we all knew that if the Virgin bid had succeeded some subsequent consolidation at MAN would have been inevitable. Long-haul would have been scaled to viability. Meanwhile, the Lufthansa interest in Condor was supported by synergies specific to them.

Of course, Thomas Cook strategy was based upon the hypothesis that proceeds raised from selling the airline could be used to offset debt from the balance sheet, thus safeguarding (or just buying time?) for the tour operating / hotel property divisions to prosper. We cannot know what sums were bid for the various TC airline divisions. But I do wonder whether potential buyers perhaps offered low-balled 'distressed' bids (for the best bits of the airline) which didn't resolve anything from the perspective of Thomas Cook themselves. We will probably never know for sure. But it is telling that TCG management backed the impossibly complex Fosun - Banks / Funds consortium as their best option in the final analysis.

Keep in mind that TC had some serious stipulations on future airline operations if these were sold separately. This would have required the new owners to continue flying most routes and guaranteeing a number of seats on these flights to the holiday arm. While this was perfectly sensible, it would have reduced the value of those airline operations to many of the potential bidders. For instance VS/DL would have wanted to reorganise the route structure to maximise revenue and profits. This would have been restricted by the sales agreement. Less flexibility means a lower bid price.

 

[EGCC_MAN]

Keep in mind that TC had some serious stipulations on future airline operations if these were sold separately.

Thanks pholling. Though I did address that particular issue in the first paragraph of post 607.