Andrew Monk, chief executive, VSA Capital
Last week I took the unprecedented step of going against the tide and turning more positive on Thomas Cook at 10p, when other analysts were turning sellers with price targets of a mere 1p.
Today at 17p and with a late Friday night deal from the banks, I remain more positive but continue to not get carried away as although time has been bought, change is required and that change needs to be more drastic than some commentators are suggesting.
We also need to see who is brought in, both as new management and as new non executive directors.
The banks have been clever; they have charged a lot but given enough to allow a rescue to happen. Thomas Cook has a very clear strategy it now has to follow. Sell assets to reduce debt. But the tricky bit is that forced sellers get low prices, and Thomas Cook needs to play a smart game and get a competitive bid going.
Thomas Cook has a very valuable position at Gatwick and that is the prize asset that could get a competitive bid going. The savings from putting two airlines together are huge and so a good price could be achieved.
Switching Thomas Cook charter to low cost schedule would not be impossible, so maybe Easyjet might fancy becoming the dominant airline at Gatwick and maybe Ryanair would fancy giving Easyjet a run for its money. Tui could do well by acquiring – much better than allowing it to fall into the hands of a low cost airline.
Virgin Atlantic would have to take a look as it could make an interesting mix between scheduled and their holiday side, and never rule out Emirates or Ethiad as they have money and big ambitions.
Finally, Tui shares have remained pretty strong during this episode for two reasons: firstly Peter Long remains positive but, probably more important, had Thomas Cook fallen it would have been a bonanza for Tui.
However, events have changed and now the worst scenario for Tui is happening. They have a rival being run for cash – a competitors who will sell at whatever price they can is never good, and this will be a tough winter. Despite having always been more positive on Tui as I do admire Peter Long, I’m afraid that even he cannot sail against the wind and so at 155p I would sell Tui.