Travel companies Thomas Cook and TUI are under serious stress

oldest tour operator is looking for a place in the shade. Since September, when it announced the first of two consecutive profit warnings, Thomas Cook’s share price has fallen by nearly two-thirds. The British company, which sells flights, hotel rooms and tours to 20m holiday-makers, is saddled with £1.4bn in debt, three times its market value.Markit, a data provider, estimates that 8% of its stock has been borrowed—typically a signal that short-sellers are circling.

Easter brought some solace, if only because Thomas Cook’s low valuation has made it an increasingly tempting takeover target. Its shares rose by 18% on April 23rd, after Sky News reported that Fosun, a Chinese conglomerate that is its largest shareholder, and two buy-out firms were interested in parts or the whole of the company.Thomas Cook’s woes reflect broader malaise in the industry. On March 29th, its Anglo-German arch-rival and the world’s biggest tourism group, issued a profit warning.

Some of the problems are cyclical. Last year’s torrid summer convinced many Europeans to seek sunshine at home. The weak pound has dampened traditionally peripatetic Britons’ enthusiasm for travel. The grounding by authorities around the world of Boeing’s 737But the companies must also grapple with structural changes. From 2015 to 2018 profits barely budged at. Thomas Cook’s fell by 20%. Millennials prefer independent travel to package tours.

To repay its debts Thomas Cook wants to sell its airline business, itself pummelled by competition from low-cost carriers. It has some worthy airport slots but is on the block at the same time as other failing airlines, notes Richard Clarke of Bernstein, a research firm. It wants to bring more retail online and focus on higher-margin premium services. At leasthas more hotels and a thriving cruise business, which generates a third of its profits. But its prospects hardly look sunny.

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