UK travel group Thomas Cook issues profit warning

Thomas Cook company said consumer uncertainty from factors such as Brexit was causing competitive pressure. (Reuters)
Updated 16 May 2019
0

UK travel group Thomas Cook issues profit warning

  • The oldest travel company in the world stumbled badly last year when a heatwave in northern Europe deterred holiday makers from booking lucrative last-minute deals
  • Thomas Cook company said consumer uncertainty from factors such as Brexit was causing competitive pressure

LONDON: Travel group Thomas Cook said economic and political uncertainty would affect profits this summer after it reported higher first-half losses on Thursday, adding it had received multiple bids for its airline unit after it was put up for sale.
The oldest travel company in the world stumbled badly last year when a heatwave in northern Europe deterred holiday makers from booking lucrative last-minute deals, leading to two major profit warnings and talk of a need to raise funds.
The company said it made an underlying loss before interest and tax of $315 million (£245 million) in the six months to March 31, compared with a loss of £65 million in the same period a year earlier, reflecting pressure on margins.
It forecast second-half underlying earnings before interest and tax would be below the same period last year, and that it had agreed a £300 million bank facility to provide more liquidity for the 2019/20 winter season.
“Trading for the Group has been challenging to date, reflecting an uncertain consumer environment which has led to a slower pace of bookings across all markets,” it said.
Thomas Cook company said consumer uncertainty from factors such as Brexit was causing competitive pressure, meaning it was having to spend more on promotional activity.
In February, the firm said it was willing to sell its profitable airline business to raise cash to fund its fight back from losses racked up in 2018 and to cope with a tough year ahead.
It said on Thursday it had received multiple bids for all and part of Group Airline, which consists of Germany’s Condor, as well as British, Scandinavian and Spanish divisions.
Lufthansa has said it wants to buy Condor with an option to acquire the remaining airlines, while Virgin Atlantic is also reportedly interested in the UK-based long-haul part of the business.
Thomas Cook added it had taken an impairment of £1.1 billion relating to a 2007 merger with MyTravel.


British Steel collapses, threatening thousands of jobs

Updated 22 May 2019
0

British Steel collapses, threatening thousands of jobs

LONDON: British Steel Ltd. has been ordered into liquidation as it struggles with industry-wide troubles and Brexit, threatening 5,000 workers and another 20,000 jobs in the supply chain.
The company had asked for a package of support to tackle issues related to Britain’s pending departure from the European Union. Talks with the government failed to secure a bailout, and the Insolvency Service announced the liquidation on Wednesday.
“The immediate priority following my appointment as liquidator of British Steel is to continue safe operation of the site,” said David Chapman, the official receiver, referring to the Scunthorpe plant in northeast England.
The company will continue to trade and supply its customers while Chapman considers options for the business. A team from financial firm EY will work with the receiver and all parties to “secure a solution.”
“To this end they have commenced a sale process to identify a purchaser for the businesses,” EY said in a statement.
The government said it had done all it could for the company, including providing a 120 million pound ($152 million) bridging facility to help meet emission trading compliance costs. Going further would not be lawful as it could be considered illegal state aid, Business Secretary Greg Clark said.
“I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made,” he said.
Unions had called for the government to nationalize the business, but the government demurred.
The opposition Labour Party’s deputy leader, Tom Watson described the news as “devastating.”
“It is testament to the government’s industrial policy vacuum, and the farce of its failed Brexit,” he said in a tweet.
The crisis underscores the anxieties of British manufacturers, who have been demanding clarity around plans for Britain’s departure from the EU. Longstanding issues such as uncompetitive electricity prices also continue to deter investment in UK manufacturing, said Gareth Stace, the director-general of UK Steel, the trade association of the industry.
“Many of our challenges are far from unique to steel — the whole manufacturing sector is crying out for certainty over Brexit,” Stace said. “Unable to decipher the trading relationship the UK will have with its biggest market in just five months’ time, planning and decision making has become nightmarish in its complexity.”
Greybull Capital, which bought British Steel in 2016 for a nominal sum, said turning around the company was always going to be a challenge. It praised the trade union and management team, but said Brexit-related issues proved to be insurmountable.
“We are grateful to all those who supported British Steel on the attempted journey to resurrect this vital part of British industry,” it said in a statement.