City reacts to Thomas Cook failure to appoint new CEO
City analysts have expressed concern that Thomas Cook has still not appointed a new chief executive, despite saying that a new head would be in place by the end of March.
While the company’s latest trading update, issued yesterday morning, was greeted with some relief by the City, analysts were disappointed there was no news on the new chief executive.
Sam Weihagen has been steering the company since the sudden resignation of former chief executive Manny Fontenla-Novoa last August, but he is due to retire.
Analyst Investec Bank said the Thomas Cook Group (TCG) needed to rigorously address its cost base, but argued this was more difficult without a permanent CEO. "We are disappointed that an appointment has not been announced today."
Langton Capital said Cook remained a "risky investment". It pointed out that today’s trading update contained no detail regarding its debt and it had not updated the City on its search for a CEO or on its capital requirements going forward. As a result, it said its shares were hard to value, which could put off investors.
However, Mark Brumby of Langton added: "TCG has been in existence for 170 years and, although that perhaps means little, consumers seem to be sticking with the company and the group has felt able to suggest that summer 2012 trading is more encouraging."
Credit Suisse said it expected Cook’s first half pre-tax earnings to be down £35m year on year and second half earnings to be down £13m. Langton expects the group to make a pre-exceptional profit of around £96m for the full year.
Investec Bank was the most upbeat about Cook’s future and following today’s update it moved its position on Cook’s shares from hold to buy: "We take encouragement from the outlook and likelihood of disposal proceeds," it said.
"This supports our view that Thomas Cook has the ability to generate sufficient cash from operations and asset sales to manage and pay down its debt.
Market reports suggest TCG has received up to 10 separate bids for Thomas Cook India, the sale of which is expected to raise £130m. Investec said a potential sale of Condor, its profitable German charter airline, could bring in another £300m.
"Trading remains difficult, but we project that the combination of operational improvements and asset disposals will enable Thomas Cook to manage its debt management and repayment programme," it said.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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