|Bid||282.10 x 0|
|Ask||283.40 x 0|
|Day's range||277.77 - 285.20|
|52-week range||2.77 - 1,090.00|
|Beta (5Y monthly)||1.70|
|PE ratio (TTM)||1.96|
|Forward dividend & yield||0.45 (16.85%)|
|Ex-dividend date||12 Feb 2020|
|1y target est||N/A|
(Bloomberg Opinion) -- When U.K. travel brand Thomas Cook relaunched as an online travel agent last month, it needed a way to convince customers that it’s become a more reliable custodian of their money since its 2019 bankruptcy and that they’ve nothing to fear from booking a holiday during a pandemic.Its solution was to promise that most of the cash customers hand over long before they go on holiday will now be held in a ring-fenced trust account until they return.(1)For anyone who’s struggled this year to get a refund from an airline, cruise ship operator or travel agent, this will sound appealing. The model is bound to become much more common as regulators begin to understand the benefits. It’s about time.When British tour operators renew their licenses to operate in the coming weeks, some may be asked to keep customer prepayments in a segregated account, the Telegraph newspaper reported recently. Currently, travel companies and airlines are often free to spend the prepayments on whatever they like, and long before the trip happens.Because of the immediate need to ensure the travel industry remains solvent, a swift regulatory crackdown on that business model would be counterproductive right now. The bigger current worry is that travel groups barely have any new bookings. German airline Lufthansa AG plans to offer only up to 25% of last year’s flight capacity during the fourth quarter.However, after the financial crisis U.K. banks were forced to separate their core retail banking services from riskier investment banking. One day, there needs to be a similar reckoning about how travel groups protect customer cash.From the travel companies’ perspective getting customers to stump up money months before they travel is great — it’s like getting a big interest-free loan. Lufthansa, cruise operator Carnival Corp. and tour company TUI AG all held several billion dollars of customer cash, according to their most recent full financial results.When Covid-19 shut down global travel, consumers realized they were getting a raw deal. Many endured a Kafkaesque battle with company bureaucracies to get their money back and they often had to make do with vouchers.Some travel agents are better at protecting their customers’ cash, and they’re calling loudest for change. “It’s scandalous that the money innocently paid for travel arrangements sometime in the future, is not required to be set aside in trust and solely spent delivering the contract,” Trailfinders says. It’s branded the current system a “protection racket.” In theory, customer prepayments are safe, even without ring-fencing. If you book a flight with a credit card it’s usually possible to get a refund if the travel company goes bust. But not everyone books this way and you’re just loading the risk onto the credit companies. That’s why the latter hold back customer money from travel companies they deem to be a financial worry. Brits who book a flight-inclusive holiday with so-called ATOL protection can also get a refund from the Air Travel Trust Fund if their travel company collapses. However, the fund was drained of cash after Thomas Cook’s demise. Setting up a trust account doesn’t guarantee that refunds would be processed quickly in the event of mass travel cancellations like those seen this year. But by preventing companies from spending the cash until customers have travelled, the money should at least be safe.(3) Travel groups are beginning to see the benefits of ring-fenced accounts, too. Saga Plc expects its decision to set up a trust account will give it a marketing advantage with its over-50s holiday clientele.Segregating customer prepayments would, however, increase a travel company’s cash requirements, which most of them can ill afford right now. For example, UBS analyst Cristian Nedelcu estimates that as much as 250 million euros ($296 million) of Tui’s cash could become “restricted” if regulators toughened up on ring-fencing. Tui had almost 6 billion euros of net debt, including lease liabilities, at the end of June and has twice had to turn to the German government for help this year.Tui’s chief executive officer, Fritz Joussen, said in May that ring-fencing customer deposits “would more or less destroy the industry.” The cash-flow impact could ripple through the travel sector, depriving hotels and other struggling suppliers of money.There’s little sign yet that the U.K. or other governments will force airlines to implement trust accounts, as some travel agents are demanding, and perhaps that’s no surprise given aviation’s precarious financial condition and the need to protect jobs.“While I think there likely would be public support for ring-fencing customer funds with airlines, too, at least in the current situation there is a risk that governments may end up footing the bill for large legacy carriers, so you can see that it might not be their top priority,” says Daniel Roeska, an analyst at Bernstein Research.Once there’s a vaccine and we’re all flying again, though, we shouldn’t forget the cavalier regard some airlines had for customer money. Better protecting that cash is the least the companies could do.(1) Thomas Cook is still be able to transfer a portion of the package holiday cash it receives to theairline, to cover the cost of the flight ticket.(2) Some trust accounts are able to use a portion of customer booking money to pay suppliers.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Europe’s distressed debt funds are intensifying the search for opportunities among the region’s highly-indebted companies as governments begin tapering support offered during the peak of the coronavirus pandemic.Funds are monitoring the debt of companies including cinema operator Cineworld Group Plc, Spanish ferry company Naviera Armas and German holiday giant TUI AG, according to people familiar with the matter who asked not to be identified. They anticipate that the end of state assistance, combined with virus-related restrictions on trade, could intensify these companies’ woes.Debt classified as distressed has slumped to 4 billion euros ($4.7 billion), down from about 19 billion euros at the peak of the crisis in March, Bloomberg Barclays index data show, partly due to almost 41 billion euros in government-backed loans. But the dry spell for distressed debt funds that raised huge cash piles during the pandemic now looks set to end.U.K. government support for furloughed employees will drop sharply from Oct. 31, while borrowers in both the U.K. and Germany face a tightening of insolvency rules this month.“The substantial financial support measures that have done much to shore up the markets are already starting to taper off,” said Duncan Priston, the London-based co-head of European distressed credit at HIG Bayside Capital.Read more: Germany Faces Wave of Insolvencies as Filings Waiver EndsPricewaterhouseCoopers expects debt restructurings and insolvencies to start increasing globally in the final quarter of this year or first quarter of next as support measures fall away, according to a recent report. Companies in hospitality, leisure, travel, tourism and retail will be particularly hard hit, the firm said.“The immediate priorities will include repairing the balance sheet and dealing with the debts accumulated during lockdown,” PwC wrote in the report.Cineworld, the world’s second-largest cinema chain, looks vulnerable. The company is preparing to start talks with creditors after warning it’s at risk of breaching loan covenants in December. It’s suspending operations at movie theaters after winter blockbusters, including the latest James Bond movie, were postponed.Naviera Armas bonds are quoted at around 48 cents on the euro, while TUI’s are currently quoted at around 93 cents. While Cineworld doesn’t have any bonds its euro-denominated loan fell to around 60-65 cents earlier this week.Representatives of Cineworld as well as Naviera Armas declined to comment for this article. A TUI spokesman declined to comment beyond a recent company statement saying the company is evaluating various measures to improve its balance sheet and maturity profile.Credit insurance company Euler Hermes expects its global insolvency index to hit a record high of +35% by 2021, with the hotspots including U.S., Brazil, U.K. and Spain.A premature withdrawal of supportive policy measures could increase the surge in insolvencies by 5 to 10 percentage points, according to the firm.David Grant, managing partner at law firm Locke Lord in London, said that the desire to support companies “come what may” has faded.“The word that is being used a lot is carnage,” he said.(Reworked third graph to clarify amount of distressed debt)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- New British measures aimed at slowing Covid-19’s spread, before it wreaks more drastic economic consequences, threaten to derail the country’s nascent consumer recovery. Many Brits had been hoping that the rebound would pick up steam with the impending Halloween celebrations and half-term school holidays.The measures from Boris Johnson’s government include new restrictions on pubs and restaurants, fresh advice for people to work from home if they can and keeping to six the number of people who can socialize together. From Thursday, pubs and restaurants will be limited to table service and they’ll have to close at 10 p.m. With last orders at 9 p.m., many businesses will effectively lose an entire sitting.When areas in northeast England introduced local hospitality restrictions last week, there was a sudden drop off in trade as people simply stayed home. But the implications are broader than the decision about whether to go out for the evening.All of this feels just steps away from a more comprehensive lockdown, and comes with the very real danger of undermining confidence. The measures send a signal to consumers that the virus is a threat once more, raising questions about whether social distancing measures already in place are enough. Just as they were starting to go out and spend again, Brits will undoubtedly become more nervous about both the health and economic implications of the pandemic.The timing is particularly difficult for consumer companies. Halloween can be a significant event for supermarkets and variety retailers such as B&M European Value Retail SA, which benefit from demand for sweets and plastic pumpkins. It’s an event that sets the stage for the rest of the year, and this year was seen especially as a barometer for things to come. Beyond the trick-or-treating, Halloween has become popular with adults too, who revel in partying at pubs and clubs in ghoulish costumes. That’s unlikely to be the case this year.The half-term holiday was also poised to be a big getaway week for tour operators and airlines. Travel companies had hoped business would pick up after many British families skipped their summer vacation abroad. With recent changes to travel advice, that demand has waned. European tour operator TUI AG said on Tuesday it had cut capacity for the winter season by a further 20%.It’s now impossible to guess what the year-end holiday season — which accounts for a large proportion of retailers’ and restaurants’ profits — will be like. That helps explain conflicting outlooks from British retailers last week. Next Plc was cautious. By contrast, John Lewis Partership Plc said it was expecting Christmas sales to be the same or better than 2019.Both views have their supporters. Affluent employees who have worked from home have amassed savings, which they might spend online. Those who’ve lost their job, or face redundancy with the cessation of the U.K. furlough support at the end of October, will be thinking differently. Whitbread Plc, owner of the Premier Inn hotel chain, said on Tuesday that it planned to cut as many as 6,000 jobs, almost a fifth of its workforce.There is a chance that by acting now with more stringent measures, the government will make sure some of the pain is out of the way by Christmas, saving the crucial trading period for retailers and restaurants. That’s highly uncertain, though, especially when so much spending in the run-up to the holiday will be determined by whether consumers have the festive feel-good factor. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.