Can Thomas Cook find a way through his perfect storm of misery? | Trip

Thomas Cook suffers from an endless holiday nightmare. He was hit by indebted debt, intense competition and exceptional factors, including the heat wave of last summer. The uncertainty badociated with Brexit is also, inevitably, a contributing factor.

This concern brought a 178-year-old affair to the brink. Eight years after its near-collapse in 2011, the tour operator needs a rescue plan if he wants to survive next winter, while holiday bookings generally decline.

One of the main problems lies entirely in the making of the company. It is bent under the weight of a £ 1.6 billion debt – the legacy of loans contracted to avoid a near collapse in 2012. Interest alone has cost it $ 1.2 billion Since then, which means that 3 million out of 11 million holidays he sold each year by financing the repayment of his debt.

A fundamental long-term challenge is that the Internet has made it much easier for small competitors to access the market and gain market share, not only in the United Kingdom, but also in its largest market, Germany.

Rival's travel agents have targeted its package travel business, while the boom in low-cost and low-cost air travel has weighed on its privately owned airline. The result is a punitive pincer movement on the group.

Faced with increasingly fierce competition, Thomas Cook had to compete to win customers by lowering his prices, which reduced his profit margins. Unlike small online players, Thomas Cook has high fixed costs due to his network of 567 stores.

With revenues under pressure and low leeway on costs, profit margins can quickly evaporate in the event of short-term setbacks.

The heat wave that broke all records last summer was one of those setbacks, as those who would have otherwise reserved short-term breaks chose to stay at home. The effect was particularly pronounced in Sweden, its third market, with potential customers who took advantage of the unusual heat of Scandinavia.

Travel abroad also became more expensive for UK customers due to the decline in the value of the pound sterling against the euro. Thomas Cook said earlier this year that there was "now little doubt" that Brexit had caused some Britons to delay their vacation plans.

High fuel costs, as well as hoteliers demanding higher prices from the tour operator, have also added to Thomas Cook's list of problems. All of these factors mean that the company does not earn enough money by selling a holiday to pay interest on its mountain of debt.

He hopes that the new funds of Chinese investors Fosun – and its banks – will give a little respite. It hopes to sell its airline at a good price and accelerate its penetration of the hotel market, which should reduce its dependence on summer packages. But above all, he must ensure his survival.