The price of Webjet shares has fallen by 6% on the concerns of Thomas Cook


The market could take the assault on the Monday following the federal elections, but not all the actions were able to follow the example.

One of the worst results of the S & P / ASX 200 index today was the Webjet Limited (ASX: WEB) share price.

In the afternoon, trading in shares of online travel agents fell by over 6% to $ 15.74. At one point they were down 7% to $ 15.60.

Why has the price of Webjet shares declined today?

With no news from the company, today's decline seems to be attributable to news about its strategic partner Thomas Cook in the UK.

The share price of Thomas Cook fell 40% less on Friday due to concerns that the travel company may struggle to get through the northern hemisphere's summer vacation.

Last week Thomas Cook made his third earnings warning in less than 12 months after reporting a half-year loss of £ 1.5 billion. He also provided a bleak outlook and warned that summer bookings have fallen by 12%.

According to the Financial Times, this led Citi analysts to suggest that his shares were "worthless". The broker suspects that the company will require a capital restructuring through a new issue of shares or a stock exchange debt.

And unfortunately for Webjet, the intermediary believes that concerns about the profitability of Thomas Cook's business could "upset consumers and generate further weakness in bookings".

In 2016 Webjet paid Thomas Cook £ 21 million to enter into a supply agreement that saw Webjet's European online booking service in the wholesale market and take responsibility for most of the volume of complementary hotel activities by Thomas Cook.

However, it is worth noting that this weakness has not yet had any impact on Webjet's performance in the 2019 financial year. Last month the company submitted to the Macquarie Group Ltd (ASX: MQG) and reconfirmed its EBITDA guide for the full year of at least $ 120 million.

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Motley Fool's collaborator James Mickleboro has no position in any of the stocks mentioned. Motley Fool Australia has recommended Webjet Ltd. We Fools may not all have the same opinions, but we are all convinced that, considering a wide range of insights, we have become better investors. The Motley Fool has a disclosure policy. This article contains only general investment recommendations (with AFSL 400691). Authorized by Scott Phillips.

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