James Moore: Follow different routes with these fellow travellers

Investment View: The damage was from the customer's description of having a bad experience

We in the media just love a good scrap and a good scandal. Sadly, this often means hard-working, well-meaning organisations are shoved aside in favour of people with big mouths.

One of those organisations is the Local Authority Pension Fund Forum (LAPF), which is frequently on the right side of debates about investment and generally has interesting things to say.

Now it has come up with a report arguing that shareholders might like to pay more attention to how companies engage employees and ensure their commitment, as opposed to exclusively focusing on financial rewards to motivate them.

Is that just, well, akin to saying wouldn't it be nice if people were just nicer to people? Good idea, but no chance of happening?

Well, hang on. According to the LAPF, and there's science behind its thinking, employees care about purpose and are drawn to working with people they connect to, and are fulfilled by achievement and progress.

They are also heavily influenced by the context in which they work: whether they feel valued and fairly treated. Of course money matters, but these things matter too.

In a nutshell, the LAPF says companies which look after their staff will do better because their employees will respond by working harder, and smarter. Makes sense if you think about it. Not that Britain's macho managers think about that sort of thing all that often. Or even think much at all sometimes.

That leads us to TUI Travel, which managed to get right up one member of staff's nose, so much that they unleashed a volley of abusive e-mails at a customer of its Thomson brand who'd had a bit of a nightmare on one of its breaks.

This made it onto the BBC's Watchdog programme and then the Daily Mail. Oh dear.

Actually, it's pretty hard to excuse what the now ex-employee did even if TUI were a horrible employer (and I should stress I'm not saying that it is).

But publicity like this is very bad for a holiday firm, not so much as a result of the abusive e-mails. They were unpleasant but probably a one off. No, the damage was from the customer's description of having a bad experience on their trip.

It's the sort of thing that might make customers think twice and look again at TUI's financially troubled rival, Thomas Cook. TUI has benefited greatly from the latter's travails and it's been showing in the results (the finals are due on Tuesday). Jeffries, the broker, yesterday said it expected TUI to hit the top of its forecast range for earnings with a strong "late" booking market. It hopes for a rise in sales targets despite the economic backdrop being less than encouraging and the egg on face incident with the unhappy customer.

I last looked at TUI in May and said buy at 177.8p. Since then the shares have shot up and have been some of this column's best performers. They trade on 11.4 times forecast earnings for the year to 30 September, assuming the company hits those forecasts when it reports on Tuesday, and 10.3 times 2013 forecasts. They offer a decent, prospective yield of 4.4 per cent rising to 4.8 per cent.

I'd view them as offering fair value right now and after a stunning run, I'd be inclined to take some profits.

As for Thomas Cook, let's get the bad part out of the way first. Its loss for the year (after tax) of £590m unveiled on Wednesday looks horrible and was £71m worse than in 2011. It includes writedowns of £369m and one-off restructuring costs of £81m. But even at the operating level (one-off nasties not included), profits are down across the board.

But – and here's where it gets interesting – while bookings are down the company has also reduced capacity. Those holidays it is offering are selling well and fetching better prices than before. Net debt was also reduced by £100m.

I said avoid at 19p. The shares are much higher and I'm now inclined to take a punt on Thomas Cook, because it does seem to be through the worst. It's a speculative bet, and things could get nasty again, but on only six times next year's forecast earnings (there's no dividend and won't be one for a while) the shares may reward risk takers if the turnaround continues. It's a speculative buy.

Finally, a rather different travel company. Hogg Robinson was once an independent financial adviser, believe it or not. These days it looks after business travellers. The problem it has suffered from is that, with costs under pressure and confidence thin, they're staying at home and using the phone.

Yesterday's results showed a negative in nearly every key categoty except net debt, which increased, and the dividend, which was held. Profits? Down 7 per cent to £17.3m pre tax.

It should still meet full-year expectations, and has made some notable client wins. Its market is very tough. But I'm inclined to hold.

PROMOTED VIDEO
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmReview: A week late, Secret Cinema arrives as interactive screening goes Back to the Future
Travel
travel
Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
artCultural relations between Sydney and Melbourne soured by row over milk crate art instillation
Arts and Entertainment
Adèle Exarchopoulos and Léa Seydoux play teeneage lovers in the French erotic drama 'Blue Is The Warmest Colour' - The survey found four times as many women admitting to same-sex experiences than 20 years ago
filmBlue Is The Warmest Colour, Bojack Horseman and Hobbit on the way
Arts and Entertainment
Preparations begin for Edinburgh Festival 2014
Edinburgh festivalAll the best shows to see at Edinburgh this year
News
Two giraffes pictured on Garsfontein Road, Centurion, South Africa.
i100
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Kenny Ireland, pictured in 2010.
peopleBenidorm, actor was just 68
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
News
i100
Arts and Entertainment
arts + ents
News
Morrissey pictured in 2013
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Regulatory Reporting-MI-Bank-Cardiff-£300/day

£200 - £500 per day + competitive: Orgtel: I am currently working on a large p...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Training Programme Manager (Learning and Development)-London

£28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

Operations Engineer (Redhat, UNIX, Solaris, Data Centre, Cisco)

Negotiable: Harrington Starr: Operations Engineer (Redhat, UNIX, Solaris, Data...

Day In a Page

Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices