Analysts: Brexit a factor to Thomas Cook’s downfall


Analysts: Brexit a factor to Thomas Cook’s downfall

British tour operator Thomas Cook announced on Monday its toughest challenge thus far, a financial collapse and shutdown of operation. Analysts believe that Brexit is one of the factors that sunk the company to a crisis.

Along with mismanagement, and fierce competition, Brexit fears compounded to the problems Thomas Cook was facing, leaving 150,000 UK holidaymakers stranded abroad and cost thousands of employees their jobs.

Thomas Cook had been forced into liquidation after failing to reach an agreement with banks and its major shareholder, China’s Fosun Tourism, on a $1.4 billion rescue plan. Before the suspension, Thomas Cook was already suffering shares slide about 90% this year.

“All of the travel industry costs are in dollars – for example, fuel maintenance and airplane leasing. With the weaker pound, the cost of everything has skyrocketed. For Thomas Cook, this has proved terminal,” Richard Branson said, founder of the Virgin Group.

“Brexit squeezed demand and made what Thomas Cook was trying to upsell on – that is, heritage and service – less relevant to customers. With a less ideal cost base, they couldn’t compete simply on price with new entrants,” Bernstein analyst said.

The information and recommendations contained in this analytical document are published strictly for information purposes and are not considered as an offer to buy or sell the trading tools mentioned above and are not intended to motivate to perform certain transactions
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