Thomas Cook shares surge on signs of funding relief

Holiday and airline group Thomas Cook’s shares climbed up to 45% on hopes that it would not need to issue new equity, although its bond prices extended their losses to record lows, amid deepening worries about the UK travel group’s debt.

Thomas Cook has been under pressure since late November when it cut its profit guidance and suspended its dividend, halving the value of its shares in just over a week. 

The company was burned by the hot summer in northern Europe, which reduced demand for travel to southern European resorts. Some traders said fears that Thomas Cook would need to carry out a fundraising had receded, boosting the stock, although others disagreed, calling yesterday’s rise a “dead cat bounce, most probably”.

Although we acknowledge the risk, our central thesis is Thomas Cook can avoid a capital raise,” said Jefferies analyst Rebecca Lane.

That thesis was underpinned by Thomas Cook’s extended flexibility on bank covenants for early next year and its progress on profitability, as well as a possible stake sale in its airline and its lower debt compared with five years ago, said Lane.

However, Thomas Cook’s bonds hit a record low after credit rating agency Moody’s cut its rating on the company’s debt to B2 from B1. 

Moody’s said the move reflected a deterioration of its credit metrics after the company’s profit warning last week and weakened liquidity.

- Reuters

More on this topic

War memorial in Swansea vandalised with anarchist graffiti

‘Simply unfair’ to drag loved ones into political arena, says Boris Johnson

Disgraced UK bishop Peter Ball dies aged 87

Typhoon jets escort plane carrying disruptive passenger back to Stansted

More in this Section

Rugby star lines out in new business role

Cork Airport new head of security as it invests €10m in baggage screening project

Number of people working in Ireland up over 20% since end of recession

'Heartbreaking for the workforce' - Kerry Foods closes UK factory with loss of 900 jobs


Lifestyle

Hozier adds more believers to his church after Cork gig

Simply off the wall: Your go-to guide to shelving

Peter Dowdall shares his top 4 flower picks to add a splash of summer colour to your garden

Ask a counsellor: ‘Why does my husband hate that our daughter’s dating a man going through divorce?’

More From The Irish Examiner