07/31 Welcome Finance Refund Enquiries
Thomas Cook has the right to issue 2billion ordinary shares at 10cents each. This means they have the right to receive an original value of 200million from shares. Therefore Thomas Cook can issue further shares and this could be used as a future source of finance for the company. This can be observed at the Welcome finance complaints website. However they have to consider whether shares are needed as the more shares there are in the business the lower the value is. This may be the reason why Thomas Cook bought back a large amount of shares as by having less shares keeps the value high.
Obligations under finance leases are where a company can lease certain things which may be easier then purchasing the asset. This is the biggest long term source of finance for Thomas Cook as it is unique to the travel industry because of the assets they require. Thomas Cook leases most of their aircraft as it makes them flexible in how they run. For more information on the topic go to the Welcome finance complaints department. Leasing is very important for Thomas Cook as they can lease the most up to date aircraft to suit the companies’ needs. Leasing also makes the company more efficient as they can rent different numbers of aircraft depending on buyer behaviour and different seasons; therefore there is a lower risk of having money tied up in unproductive assets as they can decide how many aircrafts they need, this makes Thomas Cook more cost efficient.
Thomas Cook’s balance sheet shows that they spend €515.3million on obligations under finance leases this is the same amount as in 2008. For more on this topic go to Welcome finance complaints. This could suggest the market is stable as they are still leasing the same amount of aircraft.
However in the long run it will cost Thomas Cook more to lease rather then purchasing aircrafts. However weighing this drawback against the benefits of being asset light it may not be important. As Thomas cook can be flexible and more market orientated and customer focused by leasing aircrafts.