Should Income Investors Avoid Travel Firms?

Thomas Cook's recent woes show the perils of holding either a company's bonds or shares when the business is at risk

James Gard 23 May, 2019 | 7:30AM

Airline

Investors in travel and airline stocks are right to feel nervous after Thomas Cook’s recent share price collapse and disappointing results from airlines easyJet and Ryanair.

Thomas Cook’s bondholders will share that anxiety, with its euro-denominated bonds hitting a record low on Monday. The travel firm’s case is an extreme one as Thomas Cook is fighting for survival and its bonds are rated “junk”, but the example shows that the travel sector is not often a happy hunting ground for income investors.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
ASI UK Recovery Eq Retl Acc £ UnH174.11 GBP0.70
BlackRock UK Equity D Acc8,129.14 GBP0.42
easyJet PLC1,498.50 GBP0.00
Invesco UK Companies UK Z Acc379.49 GBP0.13
Ryanair Holdings PLC15.53 EUR0.00
Threadneedle European Sel Z Acc GBP2.33 GBP0.03
TUI AG897.40 GBP0.00

About Author

James Gard  is content editor for Morningstar.co.uk

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