Thomas Cook’s shares have finally rebounded after the firm experienced a dip of nearly 60% over a period of eight days.
Last week, the company issued a second profit warning in two months, which sparked concerns over its borrowings. Furthermore, Thomas Cook said profits would be £30m lower than expected.
Since then, Moody’s Investors Service has downgraded the corporate family rating of Thomas Cook Group PLC to B2 from B1 and changed the outlook to negative from stable.
In response to the falling shares, Thomas Cook has said it suffered from a prolonged period of unusually hot weather this summer, with customers delaying their holiday decisions, putting profit margins under pressure.
“Our rating action reflects the deterioration of credit metrics after unfavourable earnings development in the financial 2018 and the group’s weakened liquidity,” said Moody’s Assistant Vice President-Analyst Vitali Morgovski.
“Furthermore, the negative outlook reflects Moody’s concerns regarding the company’s ability to recover its profitability and cash generation in the coming fiscal year as the macroeconomic tailwind becomes less supportive whereas the outcome of Brexit negotiations and their potential impact on customer behaviour that may include a shift to late bookings exacerbates the uncertainty.”