LONDON – Virgin Atlantic is on a path to making a bid for the long-haul division of UK leisure carrier, Thomas Cook Airlines. Following the successful win in the Flybe takeover plan, Virgin Atlantic seems ready to make another big investment, this time into the long-haul market.
Should the bid be accepted, the airline would get further slots on routes to Cancun, Las Vegas, and Orlando from London-Gatwick (LGW), Manchester (MAN), and Glasgow (GLA).
Virgin Atlantic’s bid will go into direct competition against Lufthansa and Indigo Partners, who ha a stake in a myriad of carriers in North America and Europe, among which Wizz Air is the most predominant figure.
In February this year, Virgin Atlantic finalized the transaction in which Flybe had been sold to Connect Airways, a consortium between Virgin Atlantic and Stobart Aviation, holding 60% between the two airlines.
With the regional market secured through its investment in Flybe, Virgin Atlantic placed its sight on the long haul division of leisure carrier, Thomas Cook.
Thomas Cook’s Airline Operation For Sale
In February 2019, Thomas Cook announced it was seeking to sell one of its divisions, trying to raise cash following significant losses last year.
The group said that the heatwaves across Northern Europe removed a portion of its booking revenues, especially on last-minute deals, meaning that up to two profit warnings had to be sent out as a result.
The Thomas Cook Group is valued at around £350 million but is wanting to extend its borrowings by up to £400 million.
Peter Fankhauser, who is the Group CEO of Thomas Cook Group spoke to Reuters back in February about the airline’s long haul division.
“Thomas Cook doesn’t need to own an airline outright to be a successful holiday company,” he declared.
Fankhauser added that a review into the sale of the airline division is happening at this moment and that the group will retain links to the carrier if a sale was to take place or not.
Whoever takes over the airline division will have access to its subsidiaries, such as Condor in Germany and mainline Thomas Cook across Britain, Scandinavia, and Spain.
The potential buyer will also have access to 103 aircraft from airports including Gatwick, Stansted, Manchester, Frankfurt and Munich alike.
The Virgin Atlantic Bigger Picture
Virgin Atlantic’s undertaking in the regional market hint of a potential network growth that, once, wasn’t successful for the carrier.
With Delta Air Lines as a major shareholder and partner, however, the landscape for its regional and long-haul divisions might change for the positive.
Virgin Atlantic is currently undergoing a turnaround stage. In November 2018, The Independent’s Simon Calder predicted that the carrier was losing up to £7,000 per hour, which is just over £1.1 million per week.
It will be interesting to see how the airline will integrate the Thomas Cook long-haul network into its own, especially as some of the markets it serves overlap with Virgin Atlantic’s current Gatwick offerings.