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.

Start your day with The Independent, sign up for daily news emails
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

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test