INVESTMENT EXTRA: Is it time to get away from travel company Thomas Cook?

The unrelenting summer sun has begun to feel like a distant memory – except for travel companies.

A heatwave that saw millions basking in their gardens, parks or at the seaside here rather than book a last-minute getaway was bad news for High Street travel agent Thomas Cook.

It has seen more than £1billion wiped off its value over the year.

Chief executive Peter Fankhauser admitted it had been a ‘disappointing year’

Andrew Herberts, head of private investment management at Thomas Miller Investment, believes there could be a couple of big bankruptcies in the travel sector over the next year.

So this would be an interesting time to invest in the companies that survive, he says, since investor confidence and therefore share prices would be low. Added to that, the remaining firms would have less competition.

As for Thomas Cook, it is adamant that it has enough spare cash to fulfil its banking agreements. But Patrick Coffey, an analyst at Barclays, says: ‘There are multiple assumptions required [to accept this]. We remain on the fence.’

Coffey has been backing Tui over Thomas Cook for most of the year. He believes Tui shares, which are down 29 per cent over 2018, have been unfairly tarred with the same brush as its less fortunate peer.

In 2011, the last time Thomas Cook had real troubles with its balance sheet, Tui was also dragged down but soon rebounded, rewarding investors who took a chance on it.

For anyone who has shares in Thomas Cook, it could be a bumpy ride over the next year. Selling now could book a hefty loss. And if the company does pull through its troubles, shares should gain ground again.

It certainly needs a strong year – Fankhauser will be hoping for a traditional, rainy British summer.

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