23rd May 2019

A Hidden Opportunity At Thomas Cook?

Lost in the noise of the ongoing troubles at Thomas Cook Group Plc is a gem of an opportunity – the company’s airline.

It is strongly rumoured that group CEO Peter Fankhauser is attempting to sell the airline part of the business in a cost-cutting exercise designed to shore up the debt-soaked balance sheet of the 175-year-old travel agent. Ironically, Thomas Cook Airline Ltd, with healthy sales growth and profit margins comparable to the better performing competitors in the Global airline industry, is the real jewel in the groups crown.

Taking into account goodwill, assets and cash on the balance sheet, Plimsoll has valued the airline business at around £500m based on our assessment of the latest accounts. A competitor buying the airline at that price would gain:

  • Hundreds of landing slots at key hubs including Manchester, London Gatwick, and Frankfurt
  • A focused fleet of over 100 Airbus only aircraft
  • Established long and short-haul routes and landing slots at major tourist destinations
  • A recognized brand name

The most attractive element must be Thomas Cook’s landing slots, particularly at Gatwick. With landing slots at a premium, particularly in the South East, buying Thomas Cook Airlines outright might be the most economical way to increase traffic on key routes.

With Heathrow at full capacity for at least another decade, Manchester and Gatwick airports are increasingly seeing airlines offering new routes such as Seattle, Rio de Janeiro. Paying around £500m early in the process would give new owners a massive foothold at these two major UK hubs.

With IAG as recently as this month saying they have no intention to bid Thomas Cook Airlines, the path is wide open for other operators to swoop in for a bargain.

The latest Plimsoll Analysis, assessing each of the worlds 350 most important Airlines has found 64 that are ripe for takeover. For more information about this unique study, please click here