Thomas Cook crisis threatens Canaries tourism

Story update 25/11/2011 @ 09:15

Thomas Cook UK has entered into conversations with hotels in the Canaries to announce that they may have to delay payments which are due next week, according to several industry sources.

The British tour operator has so far kept up with all their payment obligations with tourism providers on the islands, despite the economic difficulties. However, the lack of liquidity of the group, resulting in losses of recent months has led to Thomas Cook UK has to ask for “flexibility” from its suppliers. Canarian businesses have insisted that “there is no cause for alarm” and that these problems only affect the UK, and not the subsidiaries in the markets of Germany and the Nordic countries, which maintain their payment periods on the Islands. The British Prime Minister David Cameron has called for a report on the state of the finances of Thomas Cook Group after its collapse in the stock market on Tuesday, losing 75%, considering it important that the company is “well and healthy.”. The company has sought help for the second time in five weeks to its creditors to refinance their loans. But the fall in the stock market yesterday was remedied somewhat by an increase in the price of the company of more than 22%, at 14.00 GMT. Thomas Cook, which has posted losses operating loss of 253 million euros, 17.2% less in the first nine months of its fiscal year, explained this lack of liquidity with a decline in demand and turmoil in Northern Africa.

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Previous report 23/11/2011

The Thomas Cook crisis is threatening the continued growth in tourism in the Canaries with the latest statement released by the company yesterday. Thomas Cook brings around 2 million tourists to the islands each year, which equates to 21% of all tourism. Thomas Cook released this press release* :

Thomas Cook Group plc announces that as a result of deterioration of trading in some areas of the
business in the current quarter, and of its cash and liquidity position since its year end, the Company
is in discussions with its principal lending banks with regard to its facilities during the seasonal low
period of cash in the business.
While the Company currently remains in compliance with its financing covenants, it also intends to
seek agreement from its lending banks to adjustments that will improve its resilience if trading
conditions remain difficult.
As a result, the Company will delay its announcement of its full year results until these discussions
are concluded. The Company expects to report a headline operating profit for the year ended 30
September 2011 broadly in line with previous guidance.

*Source : http://www.thomascookgroup.com/media