Travel firm Thomas Cook has come a long way since its formation in rural Leicestershire during the early Victorian era.
Founded in Market Harborough in 1841 by businessman Thomas Cook, the fledgling company organised railway outings for members of the local temperance movement.
Some 177 years later it is is a leading global travel group, with annual sales of £9bn, 19 million customers a year, and 22,000 staff operating in 16 countries.
It has led a chequered history, including being nationalised in 1948 – when it became part of the state-owned British Railways, and owning the raucous Club 18-30 youth brand, which it recently closed after failing to find a buyer.
However, just as the travel world has progressed from temperance day trips, so the modern business and leisure scene is also changing, and at a more rapid pace than those seen in previous decades.
The firm is being buffeted by a number of factors; financial, social and even meteorological.
Six months ago shares in Thomas Cook were trading at just below 150p. Now, after two profit warnings, they are worth just a fraction of that price.
In fact its shares had fallen by nearly 60% over 8 days, to a six year low, although there was a mini-renaissance on Wednesday on news that chairman Frank Maysman had purchased 373,000 shares in the company at 21.6p.
Meanwhile, its bonds have dropped in value, as the cost of insuring its debt against defaulting on payments hit a record high. And financial analyst Moody’s has downgraded its rating on the company to B2 from B1.
‘A lot of disruption’
Stuart Gordon, an analyst at German multinational investment bank Berenberg, has followed Thomas Cook’s financial performance closely.
“There is a feeling the company may have to ask its shareholders for more money,” he says.
The firm has blamed its drop in profits on a prolonged UK summer heatwave hitting overseas bookings. Meanwhile, winter bookings are also down, by 3%.
“I think the hot weather played a part in what happened to Thomas Cook over the summer,” says Mr Gordon. But he adds: “The fact is that it is a pretty structurally challenged company.
“As consumers we are moving online, it is causing a lot of disruption for them.”
He says holidaymakers are using the likes of AirBnB and Ryanair to put together their own holidays, and no longer buying traditional package deals.
“I am not saying the package holiday industry is dead, but I do think they will continue to face challenges,” he says.
Mr Gordon says that as well as weather issues, and stiff competition from online travel agents and low-cost airlines, there are other disruptive factors, including political unrest in countries such as Turkey.
One potential move being discussed as a partial solution to Thomas Cook’s current financial headwinds, is the potential for the firm to sell its airline, which operates 94 aircraft.
“This is something that the company has previously considered but it has, thus far, concluded that the airline gives it a competitive advantage,” Mr Gordon says.
“We doubt that Thomas Cook will sell this asset. However, if the company revisits the prospect, we question whether there would be interested parties.”
Thomas Cook’s rival TUI, which owns the Thomson brand, is less reliant on package holidays and has diversified into the cruise and hotel businesses. “So they are not just reliant on package holidays,” Mr Gordon says.
According to Mr Gordon, it all means that Thomas Cook may need “some kind of fundraising” in the near future.
“If you look back to the last time they had to ask shareholders for money, you actually had a situation where I think people questioned whether they should book [holidays] with Thomas Cook or not,” he adds.
Simon Calder is the travel editor of The Independent, and has been following the company for decades.
“Thomas Cook is the strongest brand name in travel,” he says. “They have great value in their heritage, brand recognition, and they also put together pretty good holidays.
“But for the past 25 years they have taken their eye off the ball and failed to spot trends, mainly the emergence of no-frills travel and what it has meant for people’s holidays.”
He said that as well as rival TUI thriving, Thomas Cook had also been hit by the emergence of travel firm Jet2.
“It has actually replaced Thomas Cook as the second biggest tour operator. They have picked up a lot of the bread and butter holiday market that Thomas Cook used to have.”
Mr Calder said that Thomas Cook was “not a complete basket case” and that one positive was its healthy business in Germany and Scandinavia.
“But its share price is embarrassing,” he said. “The market seems to be taking the view that Thomas Cook will stay in business, but that there will be a funding call to investors.
“A lot of people emotionally feel they have a share in the ownership of Thomas Cook – it was nationalised once after all. It is a shame to see such a great brand name held in such contempt by the market.”