Greek and Tunisia Crises Set to Hit Thomas Cook

Tour operator Thomas Cook is set to lose million by way of revenue due to last week’s terrorist attack in Tunisia as well as the on-going financial chaos in Greece as they head in the peak of summer trading period. According to analysts at Jefferies, these two catastrophes could cost the under-pressure FTSE 250 Company, around £20m.

Thomas Cook is due to report the third quarter numbers covering the three months to the end of June and is expected to update shareholders on how Tunisia and the uncertainty about Greece has affected its business. According to analysts estimate, ten percent of Thomas Cooks’ passengers tend to travel to North Africa with about a third, bound for Tunisia.

Earlier in the month, the Government had warned against all, though essential travel to the country after around 38 tourists, most of which were Britons, were killed on June 26, when an Islamist gunman had attacked holidaymakers at a beach resort in Sousse.

Due to this, Thomas Cook had cancelled all booking to Tunisian till the end of October and flew all its customers home. Uncertainties about travelling to Greece also affected the tour operator. The tragedy in Tunisia as well as the chaos in Greece has been a difficult time for Thomas Cook.

Imposed Capital Control to Protect Banking System

Besides, Athens had also imposed capital control in a desperate move in order to protect its banking systems amid fear that the indebted country would be forced from the Eurozone.While the introduction of capital controllimits Greeks to €60 a day from ATMs,the same is not applicable to tourists, where the country is facing a cash crisis.

 The FCO have advised Brits who tend to travel to Greece to ensure that they carry sufficient cash which would last for the duration of their trip. Analysts stated that tourists travelling to Greece and were advised to carry plenty of funds with them had fears related to theft which could have discouraged travellers from late booking to the country.

It has been estimated by Credit Suisse that Greece accounts for about 15% of passenger volumes in summer season. Besides losing some of these bookings, the company’s margin is also likely to have come under stress as it struggles to find substitute destinations at late notice for the customers.

Analyst at Jeffries, Mark Irvine-Fortescue stated that `the terrorist attack in Tunisia and the on-going uncertainty in Greece add risk for tour operators heading into the peak trading period.

Share Prices Dropped Due to Attack/Turmoil

Tunisia is likely to negatively impact holidays in the region. The `Grexit’ saga creates uncertainty which could hold back some potential for late bookings’.

The tour operator also faced calls for a boycott in May when an enquiry in Wakefield ruled that the company had breached its duty of care when two kids had died of carbon monoxide poisoning due to a faulty boiler, in 2006. Irvine Fortescue has further commented that `while Tui and Thomas Cook have provided public assurance about customers being unaffected, Sunday’s `no’ vote meant more uncertainty which is not helpful’. Both the companies’ share prices had dropped recently due to the attack and the turmoil in Greece.