Meanwhile as Greece slides towards either default or a bailout (see our editorial of April 19 and 20 2011) we are asking companies within the EU what the impact will be on them. It was interesting to note that the one company that will suffer the largest impact is blasé about the whole thing. When asked what the impact of the Greek crisis would be on Airbus, the European manufacturer said it that it wouldn’t. I do not like having a go at Airbus from time to time but come on, I ask you, please, with the German manufacturing sector, which is keeping the euro zone going, stalling (keep an eye on this) and with UK banks up to their eyeballs with Greece bonds the EU is, without doubt in uncharted waters far more dangerous than those seen in either the 1930s or 2007/2008. Moreover, as an example, the savings made by austerity measures in the UK thus far have been exceeded by EU and IMF bailout payments during the last 12 months. The trend will continue so the taxpayers of the EU have many years of tax rises yet to come which will in turn lead to the annual holidays being cut.
Yesterday Thomas Cook, the UK’s largest tour operator (holiday firm) confirmed that 2011 is a terrible year. The firm said that £30 million of cost savings during the year will not be enough to offset weak consumer confidence and the effect of political turmoil in North Africa and the Middle East which has seen 160,000 holiday cancellations to date.
It would be worth watching Thomas Cook over the next few months for as they release deals we would usually expect to see a rush of custom, if they are unable to sell holidays at heavy discount then it will be very telling for the state of personal finances in the UK and indicate overcapacity problems for the market in the near term, bad news for Monarch and a number of other airlines that have a charter arm. It should also mean bad news for airlines without the capacity to attract business travellers. Ryanair and the like are in the middle of their worst ever period, the question is can their all powerful website sales get them out of trouble as their home markets shrink? If Ryanair avoids the red ink then it will be an impressive marker for the airline.