Sale Thomas Cook

Speculation about the takeover of the Thomas Cook Group

Jennifer Weitbrecht
23.04.2019
3 minutes

The Thomas Cook Group (TC) announced two months ago that it was to sell its airline business. This announcement has already prompted a great deal of speculation and there were further exciting developments over the Easter weekend. 

Update 09/28/2019: In the meantime, Thomas Cook is bankrupt. You can read more about this in our article.

Thomas Cook – a British company with a long tradition

The long-established company Thomas Cook was founded back in 1841 and is an “old hand” who has already survived a few crises in the 178 years since it was established, but the company now finally seems to be vulnerable. Why is this so? The answers are not surprising. There is fundamentally high pressure on prices within the industry, the sharp rise in oil prices and the fierce competition among the European airlines are also playing their part in this, and, last but not least, Brexit is causing serious problems for the British travel company. Due to the prevailing uncertainty, many British people are saving their money instead of travelling – and the demand in the local market has fallen sharply. The company is heavily in debt to the sum of more than 1.5 billion euros.

What developments are to be expected?

After initially denying such speculations, the group announced on 7th February 2019 that it was examining “all options for the Thomas Cook Group Airlines”. This also includes the sale of the airlines, including the German charter airline Condor. Overall, there is a fleet with 103 aircraft in total, the sale of which has been entrusted to investment banks. The expected revenue was originally intended to be used for digitalisation as well as further hotel investments.

New rumours emerged over the Easter weekend that it is not just the airlines, but also the tour operator business and the entire Thomas Cook Group that are up for sale. Up until now, the Thomas Cook Group has not commented on the rumours. However, the TV station Sky News reported on several prospective investors with whom the group is said to be in takeover talks. These are focused on the entire group and not just on the airlines. One of the prospective investors is the Fosun Group, the largest private conglomerate in China that already holds shares in Thomas Cook. The stock market reacted to the sale today (23rd April) with a sharp rise in the company’s shares – up to 20 percent on the London Stock Exchange.

What would the sale mean for the airline business?

If it ultimately comes to the takeover of the group by a foreign investor, such as the huge Fosun Group, this would further accelerate the sale of the airlines. The reason for this is that EU legislation prohibits foreign investors holding a majority stake in EU airlines – the limit is 49 percent. In other words, should an overall investor from a third country win the bid, this would probably require a quick demerger of the airlines so that there are no difficulties in selling the tourism company.

Two American holding companies are also interested in the entire group according to Sky News: KKR and EQT Partners. An official statement on this has not yet materialised and this may still take a few months.

Several companies have already expressed an interest in the airlines. For example, Lufthansa is considering acquiring Condor’s long-haul business and Ryanair has expressed interest in the European fleet, whereas TUI has no interest in the Thomas Cook airlines and ultimately also not in Condor.

by Jennifer Weitbrecht

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