Shares in Thomas Cook (TCG) jumped more than 10% to 24p after the boss of German airline Lufthansa said his firm will make an offer for Thomas Cook’s German airline Condor.
Lufthansa chief executive officer Carsten Spohr reportedly made the admission to journalists at Lufthansa's annual general meeting, intriguingly adding that there could even be deal to be struck for the UK holiday company's entire airline fleet.
Competition regulators could scupper such a sweeping acquisition, with Spohr admitting that anti-trust concerns would be a barrier to any rival airline buying Thomas Cook's entire flight operations.
Spohr is quoted as saying that ‘we decided yesterday in the meeting of the management board to bid for all of Condor with the option to be able to extend this to all Thomas Cook airlines.’
WHITE KNIGHT TO HELP CASH PROBLEMS
Lufthansa had been tipped to make a bid for Thomas Cook’s airline business after the troubled travel company launched a strategic review of its operations in February.
Thomas Cook would presumably insist on a provision for its own holiday-making customers to travel on the new owner’s aircraft.
Analysts Berenberg say they question the wisdom of Thomas Cook selling its airlines, but add that a ‘white knight’ coming in to buy that part of the business could help the company stem some of its cash flow problems, particularly as there’s a chance the banks could say no to Thomas Cook increasing its existing funding.
AIRLINE INDUSTRY WOES
Thomas Cook’s airline woes have reflected the industry generally, which has been struggling with price wars, rising fuel costs, industrial action by crews and uncertainty over Brexit which has prompted UK consumers to consider ‘staycationing’ rather than holidaying abroad.
Rival travel operator Tui (TUI) has also had difficulties, having shocked the market after issuing two profit warnings this year due to specific issues at its Markets & Airlines units.
While at the start of April, rival operator EasyJet (EZJ) warned that it had seen weaker customer demand and ‘increasing softness in ticket yields’ in the UK and across Europe.
Though some analysts are turning more positive on the prospects for the sector with Morgan Stanley recently citing a combination of consumer confidence data and Google Trends as suggesting that UK outbound holiday bookings are improving after a weak first quarter.
