Thomas Cook PLC 10p shares anybody?

Thomas Cook Tuesday Update Thomas Cook PLC 10p shares anybody?

Julian Bray reports:

Thomas Cook shocked the money markets over the weekend with a request to its syndicate of 17 banks for a further short term funding of £100 million, nothing wrong with that, the firm currently owes over £900 million, but they had just a month earlier also asked for ....£100 million.

The firm says its a short term cash flow funding measure to get them over the Christmas period, but the money market didn't like it and dropped the share price by a staggering 75%  now around 10p! The Bretton based firm operates more than 1,300 shops and has been around for more than 170 years.

It also operates a fleet of aircraft, all on lease, so some of the leases will be returned and the fleet size reduced. They will also trim the 200 loss making retail travel shops they have identified but that will still leave over 1,000 outlets and some outlets acquired as part of the tie up with the Co-Op. So some shops will go and a percentage of staff already on short term contracts will be trimmed as a result.

Thomas Cook recently sacked its chief executive and according to sources has already paid out some £1.1 million to terminate his contract, although the departed director is seen to be part of the current financial crisis.

Thomas Cook currently get some 30% of it revenue from the Internet, so is well placed to expand that part of the organisation.  

People who book holidays with Thomas Cook are however protected by a series of bonds and Section 75 of the Consumer Credit Act (if over £100 of the total hotel AND flight package is paid for using a credit card). The Civil Aviation Authority will get you home by air and the ABTA bond will pick up if the other options are not available. From experience, refunds are quickly settled through the credit card company route and in any case if the credit card option is available the ABTA insurance company will advise you contact your credit card campany. 

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