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| UK MUST LEAVE EUROPE! STERLING COLLAPSING. "A GOLDEN DAWN AWAITS" Honestly it does. |
24 Sept 2019.
THOMAS COOK - WHO DUNNIT?
If I were the lead-auditor tasked with uncovering the reasons for the massively costly collapse of this cash-rich, ancient company with 11 million pre-sale-pay-in-advance customers:
In order of financial scale; starting with the past Ernst & Young audit reports, I would suspiciously dig into:
1) The £1 billion+plus debt created since the takeover of MyTravel in 2007. It seems to be a share-swap-merger rather than cash deal. Who got the TC/MT shares, when did they sell them, and why did it necessitate huge loans? What are the "crippling interest" loan terms ? Did the TC CEO, Manny Fontenla-Novoa, have prior or subsequent roles in MyTravel or in the lenders or brokers? How much did the subsequently valueless MyTravel executives and friends get out of it? Was it a cunning back-to-back deal? i.e. Lose it in London (tax relief) - Make it in Monaco (tax-free)?
Y/E 30 Sep 2018
Total Debt (1,427) £1.4 billion.
Finance costs 8 (129) £129 million (9.2% - NB BoE base rate 0.75% - 12 times larger)
2) Ditto - detailed investigation into the currency hedging 2007-2019; required to pay the hotels and other Dollar and Euro denominated costs (Y/E 2018 £7,629,000,000 or £7.6B). These complex contracts via the money-markets would be huge, involving most of TC's turnover (e.g. 11 million customers at say £1,000 each = £11 billion per annum). Did any of it leak out to the benefit of connected parties? The Brexit collapse of Sterling (below) is a complicating factor. Were TC executives gambling on the money-markets?
3) Directors "Rewards". 2007 to 2019 - In total, more than £40 million. Peanuts compared to (1) and (2) above which deal with billions - but at an individual level these pay rates are equivalent to winning the lottery every year; for bankrupting the company. Did they work 2,000 hours a year? Were they taxed on UK PAYE or paid in "funny-money contracts" tax-free, offshore?
4) Did Fossun pull a fast one, We-Will-We-Won't, that tipped TC over the edge.
Maybe some of the answers will emerge as the creditors investigate where their money went?
******
19 June 2007: Thomas Cook Group was formed by the merger of Thomas Cook AG and MyTravel Group.
14 February 2008: Thomas Cook bought booking website Hotels4U.com for £21.8million. It marks the first of a series of acquisitions during that year that boosted the share price.
During 2008, Thomas Cook also snapped up luxury travel firm Elegant Resorts, Gold Medal International and Jet Tours. And it bought back its licence to operate the Thomas Cook brand in the Middle East and Asia.
THOMAS COOK - BREXIT AND STERLING
23 Sept 2019 - Several factors are fudged or missing from The Guardian's postmortem, following the sad death of veteran travel agent Thomas Cook; which is deemed to be the oldest travel-agent in the world. The BBC news this morning reported that 150,000 stranded Brits will be flown home, and their outstanding hotel bills will be paid, courtesy of HM Government and travel-insurances. The largest retreat and rescue since Dunkirk.
It will be weeks before the full deficit is calculated, as all the creditors', customers', redundant employees' and investors' claims are toted up.
What this morning's newspapers omit to quantify are the collapse of Sterling and the greed of the directors and lenders.
STERLING fell up to 20% in 2016 after the June 2016 rigged-by-lies referendum. Offshore media barons and UK politicos, shorting Sterling (selling it at a high price now to buy it back later at a low price) have ensured that Sterling continues to collapse. They plan to make another huge killing if/when we Brexit. The gambling profits are made offshore, free of tax. The majority of UK citizens pay the price in higher import and holiday costs. Leader of the House, Rees-Mogg MP has already pocketed £7 million (offshore) betting against his nation's currency. Thomas Cook's customers pay in Sterling - months ahead of their holidays - and, after their holidays, Thomas Cook pays the hotels and fares - in Dollars or Euros. The Brexit collapse of Sterling is a major factor in the bankruptcy. It will be the first of many hundreds of business failures, for the same currency-collapse reason.
[e.g. 150,000 customers pay £3,000 each in March. In September TC pays foreign hotels, aircraft fuel, airport fees etc in Dollars or Euros, upped 20% as Sterling falls. = £90 million loss. The "foreign-exchange" risk escalates between March and September as TC sell, in Sterling, say another 5 million more holidays.]
So, for the spring and summer months TC are cash rich. All the wages and rents are paid, and the immense loan interest costs are paid (see below). The Directors' salaries and bonuses are paid.
Ordinary shareholders are hoodwinked by City forecasts:
https://markets.ft.com/data/equities/tearsheet/historical?s=TCG:LSE
Consensus recommendation
It will be revealing to see what the directors, auditors and executives did with their shares in 2019.
THE GUARDIAN - THOMAS COOK LIQUIDATION - 23 SEPT 2019
Why did Thomas Cook fail
after 178 years in business? The immediate answer is that it was unable to
secure a £200 million lifeline from its bankers, including government-owned RBS.
But in truth the tour
operator’s woes go back much further – a victim of a disastrous merger in 2007,
ballooning debts and the internet revolution in holiday booking. Add in Brexit
uncertainty, and it was perhaps only a matter of time before the giant of the
industry collapsed.
In May, the group
reported more than £1bn written off from the 2007 merger with MyTravel –
better known for its brands Airtours and Going Places.
That deal was supposed
to create a European giant, promising £75m-a-year cost savings and a
springboard to challenge emerging internet rivals. In reality Thomas Cook was
merging with a company that had only made a profit once in the previous six
years, and the deal saddled the group with huge debts.
Thomas Cook collapse:
your questions answered
It is not because the
British have stopped taking holidays. Far from it, more Britons took a holiday
abroad in 2018, up from 57% the year before. It is how we are taking holidays
that has changed, with the number of city breaks now significantly outstripping
beach holidays.
The beneficiaries are
Ryanair, Easy-jet and Airbnb, with all of their customers booking
online. The losers are package holiday companies shackled to expensive high
street chains. Thomas Cook owns about 560 high street outlets.
Just one in seven of us
now pop into a high street travel agency to buy a holiday, according to travel
agent trade body ABTA. Those who do tend to be over 65, and in lower
socio-economic groups, with less money to spend.
Anglo-German Group,
TUI, Thomas Cook’s biggest rival, has suffered from similar trends, issuing
several profit warnings during 2019. But it has much smaller debts, owning many
of its own hotels and cruise ships, and arguably could see an uplift as it
takes on former Thomas Cook customers, at higher prices.
The climate crisis has
also had an impact. A Europe-wide heatwave in May 2018 reduced holiday demand
sharply, as customers delayed holiday decisions while enjoying record
temperatures at home. Then in 2019, Thomas Cook said British customers were
postponing travel plans for the summer because of worsening uncertainty
around Brexit – and the way it has hit sterling’s buying power abroad.
Thomas Cook only
narrowly survived a near-death experience in 2011. Its debt pile had already
reached £1.1bn, and it stayed afloat only after an emergency additional cash
injection - but it also meant even more debt to service.
Since 2011 Thomas Cook
has paid out £1.2bn in interest, which meant that more than a quarter of the
money it charged for the 11m holidays it sold every year went into the pockets
of lenders.
There was – for a
couple of years at least – a corporate saviour, in the form of Chinese group
Fosun International, run by Guo Guangchang, a billionaire regarded as China’s
Warren Buffett.
Fosun bought its first
stake in Thomas Cook in 2015, as part of a plan to build a global holiday and
entertainment conglomerate, having already taken over France’s Club Med and
Canada’s Cirque de Soleil.
In August Thomas
Cook planned a restructure, which included a £450m cash injection from
Fosun in return for a majority stake in the group – which also required the
banks to write off £1.7bn in debt. Other existing shareholders would be wiped
out.
It was that deal that
fell apart at the weekend. It was not surprising that the axe fell in late
September; like most tour operators, Thomas Cook enjoys revenue inflows in
the first half of the year as holidaymakers book their summer breaks, but
sizeable outflows in autumn and winter when flight and hotel arrangements must
be paid for.
Some yearn for
nationalisation. Critics say the cost of rescue flights and compensation may
far outweigh the £200m that Thomas Cook needed to survive another day. But the
government refused to step in, arguing that, like failed airline Monarch, it
was purely a commercial matter at an individual business and that customers
would be protected by the ATOL protection scheme and insurance.
How different it was 70
years ago. Thomas Cook was considered such a part of the fabric of British life
that it was nationalised in 1948, after facing bankruptcy during the second
world war. It remained in public hands, as part of British Railways, until
1972. But now it has been destroyed largely by the internet and changing
fashions, hastened along by trying to finance an impossible burden of debt
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