LONDON (Alliance News) - Moody's Investors Service on Thursday assigned a negative outlook to Thomas Cook Group PLC and downgraded its corporate family rating to Caa2 from B3 after a weak trading performance and challenging 2019 ahead.
As well as the corporate family rating, Moody's also downgraded Thomas Cook's probability of default rating to Caa2-PD from B3-PD. Moody's also downgraded its rating on the tourism group's EUR750 million senior unsecured notes due 2022, as well as its EUR400 million senior unsecured notes due 2023, to Caa2 from B3.
Moody's said the ratings change was the result of weak trading for the six months to March 2019 and a "challenging outlook" for the summer season of 2019. The downgrade was also a product of a drop in liquidity headroom and the expectation of more cash outflows.
In addition, Moody's said its downgrade was further attributed to the fact that new financing to support Thomas Cook's liquidity over the winter "is reliant on certain conditions related to the airline strategic review process".
"Concerns of sustainability of the company's capital structure regardless of the whether the airline sold," was also cited as a cause for downgrade.
In terms of the negative outlook, Moody's said it "reflects the expectation that trading performance will continue to deteriorate in fiscal 2019, with further negative cash flows, putting increasing pressure on liquidity. It also assumes significant execution risks in delivering a sale of the airline business and risks of sustainability of the capital structure."
Shares in Thomas Cook closed up 2.1% at 12.47 pence on Thursday.
