Banks ‘are confident in Thomas Cook’s future’ – Fontenla-Novoa

Thomas Cook chief executive Manny Fontenla-Novoa will resume his battle to reassure investors about the future of the group this week, amid weekend reports the company is considering pulling out of long-haul package tour operating.

Fontenla-Novoa’s job was made somewhat easier by a near 6% recovery in Thomas Cook’s share price on Friday. Shares in the group rebounded by 5.88% to 72p ahead of the weekend following news that the proposed retail merger with The Co-operative Travel and Midlands Co-operative has been provisionally cleared by the Competition Commission.

Major shareholder Lloyds Banking Group demonstrated its confidence in Thomas Cook by buying 7.5 million shares to take its stake in the group above 6.6%.

Fontenla-Novoa told Travel Weekly the group’s banks appeared confident in Thomas Cook’s future, saying: “We have extended our banking agreement. If you wanted a test of the banks’ confidence, you couldn’t get better than that.”

A management review of the UK business is underway following a profit warning issued on July 12. Details are not due to be announced until August 10, but The Sunday Times reported Fontenla-Novoa “is considering pulling out of long-haul package holidays”.

Tui Travel shares also rose on Friday, by 3.5% against a rise of less than 1% across the FTSE 250 index. However, Tui Travel shares may weaken a little after majority stakeholder Tui AG, based in Germany, announced it is unlikely to sell its 38% holding in shipping line Hapag Lloyd this year.

Tui AG had been expected to sell Hapag Lloyd and use the cash to increase its holding in Tui Travel. The expectation of a deal has previously led to a rise in the value of Tui Travel shares.

Tui AG said it had been unable to find a buyer for Hapag Lloyd willing to pay the right price. Elsewhere, easyJet’s market valuation underwent a transformation as its share price soared 17.68% on Friday.

The carrier announced an increase in expected profits for the year on Friday, raising its forecast from £179 million to between £200 million and £230 million. EasyJet chief executive Carolyn McCall said more than 75% of the carrier’s seats for this summer had been sold.

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