LONDON (Alliance News) - Shares in Thomas Cook Group PLC dropped on Thursday as the stock was downgraded by both Fitch and S&P on concerns of weak trading and further deterioration.
Thomas Cook shares were trading 5.7% lower at 11.52 pence each on Thursday morning.
On Wednesday, Fitch Ratings downgraded the travel company's long-term issuer default rating to CCC+ from B and placed it on rating watch negative.
Fitch has also placed on negative watch and downgraded the senior unsecured rating to CCC+/RR4 from B+/RR3 for the bonds issued by Thomas Cook.
"The downgrade reflects the tight liquidity we expect Thomas Cook to face towards the end of 2019 should it not sell its airline division or be able to draw on the planned GBP300 million senior secured facility based on the currently agreed mandate letter and term sheet," Fitch explained.
Furthermore, Fitch said it expects Thomas Cook's earnings and profitability to fall on the previous year due to lower bookings and Brexit uncertainty.
Meanwhile, also on Wednesday, S&P said that following Thomas Cook's interim results, it now anticipates revenue and underlying earnings to contract in financial 2019.
S&P therefore, lowered to CCC+ from B- the long-term issuer credit and issue-level ratings on Thomas Cook and placed the stock on a negative outlook.
S&P said: "The negative outlook reflects the possibility that amid soft trading conditions Thomas Cook's performance could continue to deteriorate, weakening earnings, cash flows, and liquidity."
In mid-May, the travel company reported a widened interim loss due to significant goodwill impairment charges and warned on tough trading ahead.
For the six months to March 31, the company reported a sharply widened pretax loss of GBP1.45 billion compared with GBP303 million pretax loss a year prior.
Revenue fell to GBP3.01 billion from GBP3.22 billion, as the first six-months represented a period of "uncertain consumer environment" across the firm's markets.
The company also said it received multiple bids for "all and part" of the company's airline which was put up for sale amid a review of the group business aimed at restoring profitability.
