The shares of Thomas Cook have rebounded following a torrid week. It rose by as much as a third on Wednesday morning. It was able to claw back some of the losses that reached almost 60 percent in the last eight days.
The rise came as the corporate family rating of the travel agents was downgraded by Moody’s to B2 from B1. It also changed the outlook to negative from stable.
Last week, the company released its second profit warning in as many months. It comes after the hot summer affected the bookings as the Brits chose to stay at home to soak up the sun.
The shares plunged to their lowest point in more than five years in the aftermath of the hot weather. However, last Wednesday morning, they were able to bounce back by 32.6 percent to 30.12p.
Vitali Morgovski, the assistant vice president-analyst of Moody’s, stated: “Our rating action reflects the deterioration of credit metrics after unfavourable earnings development in the financial 2018 and the group’s weakened liquidity.”
He added: “Furthermore, the negative outlook reflects Moody’s concerns regarding the company’s ability to recover its profitability and cash generation in the coming fiscal year as the macroeconomic tailwind becomes less supportive whereas the outcome of Brexit negotiations and their potential impact on customer behaviour that may include a shift to late bookings exacerbates the uncertainty.”
The news was released as Lesley Knox, the director of Thomas Cook, and Frank Meysman, its chairman, bought the stock of the company at its new, reduced price.
Last Wednesday Chief executive Peter Fankhauser has ruled out a rights issue to raise money and will focus on developing its own-brand hotels division and growing the online business.
Peter Fankhauser, the chief executive of the company, has ruled out a rights issue to increase money. He said that the firm will concentrate on developing its own-brand hotels division and developing the online business.