James Moore: No fly-by-night firm but Thomas Cook can't afford to trip up in appeal to lenders

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The Independent Online

Outlook Business as usual, Thomas Cook's interim chief executive Sam Weihagen said yesterday as he went cap in hand to the company's banks in an attempt to get them to ease the holiday company's lending covenants. Again. Really, his words were laughable, but not very funny. Because make no mistake these are dangerous times for his business.

If you run a package holiday operator, announcing that your business is in serious trouble – and companies do not go running to their banks unless they are are in a real mess – has consequences. For a start suppliers take fright and impose all sorts of onerous conditions even if the banks ease theirs. But that's not the worst of it. The real danger is that customers will take one look at yesterday's statement and run off to the sunnier climes of companies they regard as safer bets.

It's true that Thomas Cook is no fly- by-night operation with apparently juicy looking offers that disguise a rotten core. Its customers won't end up stranded if the roof falls in because it has all the relevant protections and policies in place to get them home.

But here's the problem: why take the risk of dealing with a company with a question mark hanging over it when there are alternatives available where you can be reasonably sure that you won't get your holiday ruined by a ferry boat load of stress about getting home half way through your trip. Which is what will happen if Thomas Cook trips up.

Bullish sounding statements about a "robust business going forward" do nothing to address that crucial point. People have heard it all before.

Another question Thomas Cook isn't going to find easy to answer is how it was allowed to get in this state in the first place. Yes the Arab Spring has shaken bookings for that region, but Thomas Cook can hardly say that it is the only travel company to be affected by the upheavals. Nor is it the only company to have been affected by declining consumer confidence.

Of course, it is the only travel company that jumped head first into a big merger – with Co-operative Travel Services – at a time when the economy looked about as safe as a deposit account with Northern Rock before the Government stepped in. And it is the only company currently pleading with its banks.

If you think about it, there are some rather eerie similarities between the plight of Thomas Cook today and the plight of the afore mentioned Northern Rock a few years ago. In both cases there were honeyed words and reassurances. Both companies had protection schemes in place. But in both cases the logical response when crisis hit was (and is) for consumers to take their business elsewhere.

An ill economic wind is common to both situations. So is where the blame should lie: at the doors of the managements. There are, however, two key differences between bad old Rock and today's Thomas Cook. The first is that the latter is not yet a terminal case. The second is that if it becomes one there won't be any ministers riding to the rescue with sackfuls of taxpayers' cash.