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Ponty Mython

Thomas Cook

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I am being a bit thick here, but I can't understand how Thomas Cook can blame its massive loss on the summer heatwave hitting bookings, whilst its revenue is up over 5%. Surely this is a simple case of margin destruction? 

They are fucked anyway, I don't know why tour operators still exist.

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1 minute ago, crashmonitor said:

Yep currency losses against Asia and US...Bhat, dollar, yuan etc. About quits on the Euro.

They think we are all stupid. Guess on past record, most of us are. o.O 

once you stop believing everything they tell you on the news, the more you stop and think and the more easier it is to spot the lies. 

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15 minutes ago, Ponty Mython said:

I am being a bit thick here, but I can't understand how Thomas Cook can blame its massive loss on the summer heatwave hitting bookings, whilst its revenue is up over 5%. Surely this is a simple case of margin destruction? 

They are fucked anyway, I don't know why tour operators still exist.

Becasu they are useless cunts grasping at straws, looking for excuses.

 

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I don't understand these old school travel companies. They saw the threat from the likes of Skyscanner, Lastminute.com etc 10-15 years ago but didn't bother doing anything about it.

Imagine sitting on the board of a 100+ year old company turning over billions and thinking, nah, let's not diversify, the internet won't eat into our bottom line.

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1 minute ago, spunko said:

I don't understand these old school travel companies. They saw the threat from the likes of Skyscanner, Lastminute.com etc 10-15 years ago but didn't bother doing anything about it.

Imagine sitting on the board of a 100+ year old company turning over billions and thinking, nah, let's not diversify, the internet won't eat into our bottom line.

I imagine most of the directors think instead of cannibalize their own sales with a online only spinoff/or changing to completely online only model they think "fuck it that's far too much like hard work, I got golf at 2pm anyway. Lets milk this cow for another 10 years, get my big fat payments and pension contributions then I'll fuck off and let someone else deal with it" By that time it's impossible to turn things around and the company is fucked. 

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Heard they had a £9m profit last year so the £163m loss wipes out twenty years' profits at that rate.

They mentioned a high level of debt so that may be the real problem: feeding the debt monster.

Six month LIBOR has ticked over 1% and it's been a long time since I've seen that.

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25 minutes ago, spunko said:

I don't understand these old school travel companies. They saw the threat from the likes of Skyscanner, Lastminute.com etc 10-15 years ago but didn't bother doing anything about it.

Imagine sitting on the board of a 100+ year old company turning over billions and thinking, nah, let's not diversify, the internet won't eat into our bottom line.

There's always an assumption with businesses, for some reason, that they can be constantly restructured to compete with any changes in the marketplace. Depends on the market change sometimes they can but very often they can't and it's better to start from scratch. 

Riding the existing customer base horse into the ground isn't necessarily a bad management strategy. It's like cars, sometimes you can keep them running other times it's a better stategy to scrap them and start again with a brand new one.

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9 minutes ago, SNACR said:

There's always an assumption with businesses, for some reason, that they can be constantly restructured to compete with any changes in the marketplace. Depends on the market change sometimes they can but very often they can't and it's better to start from scratch. 

Riding the existing customer base horse into the ground isn't necessarily a bad management strategy. It's like cars, sometimes you can keep them running other times it's a better stategy to scrap them and start again with a brand new one.

They needn't have re-structured, but they could have bought them out and run them as a separate entity. I'm assuming 10 years ago Thomas Cook were swimming in cash, compared to now.

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51 minutes ago, spunko said:

I don't understand these old school travel companies. They saw the threat from the likes of Skyscanner, Lastminute.com etc 10-15 years ago but didn't bother doing anything about it.

Imagine sitting on the board of a 100+ year old company turning over billions and thinking, nah, let's not diversify, the internet won't eat into our bottom line.

Its hard to say.

One, there's different markets. Once you get to he over 60, who are the most likely to use a travel agent, Id guess that interwb makes no difference.

However, there's no need to hang onto bricksnmortar - use shared space, offer some support, go out and meet OAPs in OAP areas, all bckedup driven online.

Two, why cant xxx go online?

After a good 15 years of looking at this, and talking to businesses, Ive come to the conclusion - the current batch of owners/managers/wokres just cant.

Management are clueless, which is why you get so many 'IT disasters'

The workforce are clueless. The only people with any IT 'expertise' tend to be some social inept obese star trek fan. And they are clueless about manmaging sofware thats not hand on a plate from some supplier, at great cost.

My opinion, and I tells this to everyone, is that you wont have business having software. Youll have software having businesses.

The nature of business, at its simplest, is transactions. Thats what software is.

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1 hour ago, One percent said:

once you stop believing everything they tell you on the news, the more you stop and think and the more easier it is to spot the lies. 

Well said.  So true.  So many twists, omissions, implied comments, misinterpretations, and plain lies.

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11 minutes ago, spunko said:

They needn't have re-structured, but they could have bought them out and run them as a separate entity. I'm assuming 10 years ago Thomas Cook were swimming in cash, compared to now.

Their balance sheet is dwindling it was at half a billion five years ago and was at 280 million at the last accounts. But 3 billion is booked in intangibles ( probably worthless) so solvency is an issue. Booking goodwill is endemic in Travel . Tui Ag has 3.5  billion intangibles, the same as net assets. Shades of the retail and civil engineering companies such as Carillion and BHS.

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31 minutes ago, Frank Hovis said:

Six month LIBOR has ticked over 1% and it's been a long time since I've seen that.

Can you remind me again about LIBOR. What do you think this means for us. 

 

Tend to think the future is told by old crones cackling ominously over smoking pots, but have a feeling the future is signposted to us in seemingly bengnign little sentences like that one. 

So, yes, can you expand a little on that if you don't mind. 

{apologies for the 'so' .} 

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26 minutes ago, Poseidon said:

Can you remind me again about LIBOR. What do you think this means for us. 

 

Tend to think the future is told by old crones cackling ominously over smoking pots, but have a feeling the future is signposted to us in seemingly bengnign little sentences like that one. 

So, yes, can you expand a little on that if you don't mind. 

{apologies for the 'so' .} 

So, LIBOR is...

The pre-margin rate at which banks lend to companies.  Bank loan agreements will usually be written as the borrowing rate is the margin of 1.5% (say) plus the LIBOR rate.

Today's overnight LIBOR is 0.68%, 3 month 0.89%, 6 month 1.00%.

LIBOR is the interbank overnight offer rate (which is higher than the bid rate, LIBID, and both are higher than the actual overnight rate SONIA which is typically BoE base rate plus 0.2%) onto which banks are required by the BoE to put a forward projection out to one year on a best guess basis and provide these to the BoE to combine into a next day LIBOR curve.  Banks are unhappy about producing this forward curve because it is a guess and people were actually locked up for (deliberately) guessing wrongly; as a result it is ceasing production in IIRC 2020 which will cause quite a few problems.  It prices in future expectations of BoE rate rises so that with base rates at 0.75% then a further 0.25% rise is expected within six months; and by interpolation within three months.

Corporate bank facilities are usually revolving credit facilities or RCFs where the company borrows in chunks, with a minimum set in the agreement, say £1m,,and with each borrowing selects for how long it is borrowing it.  If it borrows today for six months then it is paying 1.00% + margin on that borrowing.  If it had been borrowing for six months a month ago today then it woudl have been paying 0.91% + margin on that borrowing.

The increase of 0.09% may not sound much but start multiplying that out across all the floating rate corporate borrowings and you are seeing that coming off bottom line profits. 

 

Edit: missed the "for us".  Corporate borrowers include banks and building societies; six month LIBOR going up 0.09% will immediately hit their costs of borrowings and therefore the rate at which they will lend (say on fixed rate mortgage deals) to Joe Public.

It's slow but there does now look to be a global switch from weakening your own currency to strengthening it.  House prices are already falling in London and the great crash may finally be on with the cause being, as widely predicted, higher interest rates.

I happened to hear on the radio that after cutting rates South Africa is raising them again:

south-africa-interest-rate.png?s=sarprt&

Edited by Frank Hovis

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Bit like estate agents, when the tools become available for people to do things themselves for free, it shouldn't be a surprise that they suddenly find themselves on the redundancy pile.

Unlike estate agents, I've never found travel firms to be total bastards though. YMMV.

 

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29 minutes ago, Frank Hovis said:

So, LIBOR is...

The pre-margin rate at which banks lend to companies.  Bank loan agreements will usually be written as the borrowing rate is the margin of 1.5% (say) plus the LIBOR rate.

Today's overnight LIBOR is 0.68%, 3 month 0.89%, 6 month 1.00%.

LIBOR is the interbank overnight offer rate (which is higher than the bid rate, LIBID, and both are higher than the actual overnight rate SONIA which is typically BoE base rate plus 0.2%) onto which banks are required by the BoE to put a forward projection out to one year on a best guess basis and provide these to the BoE to combine into a next day LIBOR curve.  Banks are unhappy about producing this forward curve because it is a guess and people were actually locked up for (deliberately) guessing wrongly; as a result it is ceasing production in IIRC 2020 which will cause quite a few problems.  It prices in future expectations of BoE rate rises so that with base rates at 0.75% then a further 0.25% rise is expected within six months; and by interpolation within three months.

Corporate bank facilities are usually revolving credit facilities or RCFs where the company borrows in chunks, with a minimum set in the agreement, say £1m,,and with each borrowing selects for how long it is borrowing it.  If it borrows today for six months then it is paying 1.00% + margin on that borrowing.  If it had been borrowing for six months a month ago today then it woudl have been paying 0.91% + margin on that borrowing.

The increase of 0.09% may not sound much but start multiplying that out across all the floating rate corporate borrowings and you are seeing that coming off bottom line profits. 

 

Edit: missed the "for us".  Corporate borrowers include banks and building societies; six month LIBOR going up 0.09% will immediately hit their costs of borrowings and therefore the rate at which they will lend (say on fixed rate mortgage deals) to Joe Public.

It's slow but there does now look to be a global switch from weakening your own currency to strengthening it.  House prices are already falling in London and the great crash may finally be on with the cause being, as widely predicted, higher interest rates.

I happened to hear on the radio that after cutting rates South Africa is raising them again:

south-africa-interest-rate.png?s=sarprt&

Thanks. Comprehensive reply. I had an idea that rates are trending up. Not sure why though.

My thoughts are money is/has been cheap for so long because there's a glut of it. (a glut of everything else as well). Why there's a glut,im not sure. It could be because governments are creating so much of it, but more likely because money represents the real wealth we create, and we have created an awful lot of wealth in the last couple of decades. 

Anyway ignore those ramblings, the issue for me is I've applied for a mortgage for major home improvements and am going for a 10 year fix. The sensible way would be a 2 year fix then reapply on a much better LTV when I've added value to the house. But something tells me a 10 year fix is safer. And if it's not, then fuck it I'll pay the price for the certainty. 

Back to the thread. 

How do people pay such huge sums to go abroad these days.  4 people for 2 weeks somewhere hot with a load of other twats can't cost less that 3 grand. That's a lot of coin to go somewhere to stress out on a beach because the holiday is not making you as happy as the adverts said you were going to be when you booked it back in January. *

 

* maybe I'm wrong,  it's just I hate 'holidays'. 

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7 minutes ago, sarahbell said:


I don't know why we still allow people to fly anywhere.

 

There's quite a bit of special dispensation from God and hypocrisy for flying. Carbon footprint of two people flying from London to Sydney and back equals one year's average footprint.

This I guess is the must attend event for your average Green SJW from Islington then..The Sydney International Environment Conference.

https://www.eianz.org/conference-information/2018-eianz-annual-conference

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12 minutes ago, Chewing Grass said:

I always found the problem with 'expensive' holidays with kids in tow was knowing I had to go back to work to pay for it.

After a couple of days back at work I felt like I hadn't been anywhere!

On the flip side, I've found being abroad with small kids such hard work that I've gone back to my job for a bit of peace and quiet.

 

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3 hours ago, Ponty Mython said:

I am being a bit thick here, but I can't understand how Thomas Cook can blame its massive loss on the summer heatwave hitting bookings, whilst its revenue is up over 5%. Surely this is a simple case of margin destruction? 

They are fucked anyway, I don't know why tour operators still exist.

Unless they are catering specifically to people channeling Nostradamus I can't see why this Summers heat wave would come in to the equation. Certainly anybody with kids will be booking stuff up well in advance, so might change behaviors for next year if you want to be generous.

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35 minutes ago, Poseidon said:

Thanks. Comprehensive reply. I had an idea that rates are trending up. Not sure why though.

My thoughts are money is/has been cheap for so long because there's a glut of it. (a glut of everything else as well). Why there's a glut,im not sure. It could be because governments are creating so much of it, but more likely because money represents the real wealth we create, and we have created an awful lot of wealth in the last couple of decades. 

Anyway ignore those ramblings, the issue for me is I've applied for a mortgage for major home improvements and am going for a 10 year fix. The sensible way would be a 2 year fix then reapply on a much better LTV when I've added value to the house. But something tells me a 10 year fix is safer. And if it's not, then fuck it I'll pay the price for the certainty. 

Back to the thread. 

How do people pay such huge sums to go abroad these days.  4 people for 2 weeks somewhere hot with a load of other twats can't cost less that 3 grand. That's a lot of coin to go somewhere to stress out on a beach because the holiday is not making you as happy as the adverts said you were going to be when you booked it back in January. *

 

* maybe I'm wrong,  it's just I hate 'holidays'. 

Central bank base rates - BoE, Fed, ECB - give you a theoretical rate. Noone directly borrows from a central bank, so the rate is useless.

LIBOR gives you the rate that banks are actually willing - thats put there money in their pocket and lend -  other banks overnight i.e. very short term, to another org that is backed by th same or another central bank, and is a product that the bank understands - money/debt.

Its more complex when a regulated banks lend to a non bank/company, even for a short period. Big as they are, Barclays lending to Crazy Pabs Cocaine import/export Ltd might go wrong - central banks my change, company might enter bankruptcy, company assets might be siezed by FBI etc etc.

So, you get spreads over LIBOR for different companies, in different industries etc etc.

 

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39 minutes ago, Poseidon said:

Thanks. Comprehensive reply. I had an idea that rates are trending up. Not sure why though.

My thoughts are money is/has been cheap for so long because there's a glut of it. (a glut of everything else as well). Why there's a glut,im not sure. It could be because governments are creating so much of it, but more likely because money represents the real wealth we create, and we have created an awful lot of wealth in the last couple of decades. 

Anyway ignore those ramblings, the issue for me is I've applied for a mortgage for major home improvements and am going for a 10 year fix. The sensible way would be a 2 year fix then reapply on a much better LTV when I've added value to the house. But something tells me a 10 year fix is safer. And if it's not, then fuck it I'll pay the price for the certainty. 

Back to the thread. 

How do people pay such huge sums to go abroad these days.  4 people for 2 weeks somewhere hot with a load of other twats can't cost less that 3 grand. That's a lot of coin to go somewhere to stress out on a beach because the holiday is not making you as happy as the adverts said you were going to be when you booked it back in January. *

 

* maybe I'm wrong,  it's just I hate 'holidays'. 

I think the root cause is twofold: the disagreement between China and the US and US monetary tightening. 

US interest rates being the dominant world rate because of the amount of their bonds (government and corporate) in issuance.

Up to now China has been happy to buy as many bonds as the US Treasury prints because of their huge trade surplus.  However this past year, as Russia Today keeps gleefully reporting, China has become a net seller therefore to ensure US Treasury auctions are successful then yields need to be higher.  This is clear market tightening driving rises.

Then the Fed has embarked upon both rate rises and monetary tightening as an act of policy to undo the long period of ultra low rates and QE.  This is sometimes slower, sometimes faster but it's all one way.

So a combination of US monetary policy and lower investor bond appetite drives up the US rates which drives up all other rates eventually as whilst banks like weak currencies if they get too weak then commodity prices shoot up taking inflation with them.  The strengthening of the dollar (primarily: oil) means that sterling doesn't just have to not weaken it can't even stand still so rates have to rise.

If I were in your shoes I would be going for a ten year fix.  Obviously not advice and partly driven by my usual risk aversion!

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