Tui has shocked investors with a profit downgrade and Thomas Cook has put its airline up for sale, underlining the pressures being felt by travel operators this year. Already back in 2008, a merger of Condor and Air Berlin was blocked by German competition authorities.
The Thomas Cook Group, which a fleet of 103 jets operating in the UK, Scandinavia and Germany, has said it is looking for "greater financial flexibility and increased resources" for future investment into the hotel arm of its business.
"As such, we would be surprised if their strategic review announced they got the entire business away".
Although the company remains at an earlier stage in the review process, the travel agent said it would "consider all options to enhance value to shareholders" as it sought a solution to losses. "We will provide an update on this process in due course".
The company added: "Our strategy for the airline has been to profitably grow as a leading European leisure airline with a reliable, customer-focused service". We now operate a fleet of 103 aircraft, of which a quarter serve long-haul destinations.
Its underlying operating loss rose by £14m to £60m for the three months ending 31 December 2018. Finally, Morgan Stanley cut Thomas Cook Group to an "equal weight" rating and dropped their price target for the company from GBX 155 ($2.03) to GBX 60 ($0.78) in a report on Wednesday, January 30th.
The latest funds will be used to buy two hotels in Spain, a 250-room hotel in the Canary Islands and a 300-room hotel in the Balearics.
Thomas Cook Group plc (LON:TCG)'s share price dropped 10.5% during trading on Tuesday. It made earnings before financing costs and tax of 129 million GBP past year, although it reported a loss in the last three months of 2018.
Group revenue for the quarter was broadly unchanged, rising by one per cent on a like-for-like basis to £1.6 billion. The Group Airline continued to perform well, delivering a seasonal underlying loss in line with a strong comparative period a year ago.
Europe's big two tour operators Thomas Cook and TUI both are both expecting a rough year with the hangover from last year's heatwave still hurting bookings. Capacity reductions led to a 4% rise in prices.
Separately, shares in rival travel Tui sank 20% on Thursday after the company slashed its earnings forecast. blaming last year's "extraordinary hot weather" and the weak pound.
"Where Summer 2018 bookings started very strongly, bookings for Summer 2019 reflect some consumer uncertainty, particularly in the United Kingdom".