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LONDON BRIEFING: Thomas Cook Collapse Ripples Through Travel Sector

(Alliance News) - Thomas Cook Group has ceased trading after failing to secure a last-ditch ...

Alliance News 23 September, 2019 | 8:03AM
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(Alliance News) - Thomas Cook Group has ceased trading after failing to secure a last-ditch rescue deal, leaving an estimated 150,000 Britons abroad awaiting repatriation.

The troubled tour operator was unable to secure the extra GBP200 million needed to keep the business afloat following a full day of crucial talks with the major shareholder and creditors on Sunday.

Richard Moriarty, the chief executive of the UK Civil Aviation Authority, said the government had asked his organisation to launch "the UK's largest ever peacetime repatriation".

Giving an early indication of the knock-on effect of the collapse across the wider European holiday industry, On the Beach Group said Monday it expects a one-off exceptional cost from helping Thomas Cook Airlines customers to organise alternative travel arrangements, as well as lost margin on cancelled bookings.

On the Beach is assisting holidaymakers who are stranded at resorts and also those whose travel plans will be affected.

On the Beach said the one-off hit from Thomas Cook is to be taken in the current financial year, which ends this month. It will be able to recover the cost of cancelled flights via a chargeback claim.

On the Beach said it is evaluating the potential effects of the failure on its results for the following year, ending September 30, 2020, and a further update will be provided when appropriate.

On the Beach was down 3.2% early Monday. Thomas Cook shares were suspended from trading.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 0.1% at 7,355.15

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Hang Seng: down 0.8% at 26,235.80

Nikkei 225: Tokyo market closed for holiday.

DJIA: closed down 159.72 points, 0.6%, at 26,935.07

S&P 500: closed down 0.5% at 2,992.07

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GBP: soft at USD1.2462 (USD1.2490)

EUR: firm at USD1.1021 (USD1.1007)

Gold: up at USD1,513.52 per ounce (USD1,503.40)

Oil (Brent): up at USD65.02 a barrel (USD64.72)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Monday's Key Economic Events still to come

Japan Autumn Equinox Day holiday. Financial markets closed.

1100 BST UK CBI Industrial Trends Survey

0930 CEST Germany flash purchasing managers' index

1000 CEST EU eurozone flash PMI

0945 EDT US flash manufacturing and services PMI

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Boris Johnson has played down the chances of a "New York breakthrough" on Brexit during discussions with key EU leaders at the United Nations. The UK prime minister is set to meet with Angela Merkel, Emmanuel Macron, Donald Tusk and Leo Varadkar during the annual General Assembly in New York City. Johnson will this week discuss his proposals for a new Brexit deal as the October 31 deadline looms. He celebrated a "great deal of progress" having been made but sought to limit expectations when speaking to reporters on board the RAF Voyager on the way to JFK airport. The UK PM will meet with European Council President Tusk on Monday, before meeting German Chancellor Merkel and French President Macron. Johnson will meet with his Irish counterpart Varadkar the following day.

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Jeremy Corbyn will face a showdown with Labour members over Brexit policy as grassroots activists call for the UK opposition party to back remaining in the EU. The Labour leader has called for a neutral position going into a general election, saying that he would negotiate a new Brexit deal with Brussels which would then be put to a referendum. But activists in Brighton will vote on whether the party should campaign to stay in the EU – even if that means rejecting a deal a Labour government has negotiated with the EU.

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The European Automobile Manufacturers Association and key national carmakers associations have warned of the "catastrophic consequences" of a no-deal Brexit. With just over a month to go before the UK is due to leave the EU, ACEA and the European Association of Automotive Suppliers, as well as 21 national associations, joined forces to release a rare joint statement Sunday to stress the impact a no-deal Brexit would have on what it called "one of Europe's most valuable economic assets." Contributors to the statement included the German Association of the Automotive Industry, the Committee of French Automobile Manufacturers and the Society of Motor Manufacturers & Traders in the UK. The European industry chiefs warned that the repercussions of a no-deal to what it called a "vital sector" will be severe.

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The US and China ended preparatory discussions ahead of a fresh round of trade talks on Friday, with Chinese state media calling the meeting "constructive". During the two-day consultations, deputy ministers from the two sides "conducted constructive discussions on economic and trade issues of common concern," the Xinhua news agency reported. The delegations "seriously discussed" arrangements for the upcoming round of trade talks in October, it added. While the language was positive, it did not go beyond that of standard statements issued by China following such talks in the past.

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The US will send additional troops to the Middle East in the wake of drone strikes on oil facilities in Saudi Arabia, US Defence Secretary Mark Esper said in Washington on Friday. US President Donald Trump had approved the deployment of additional troops of a defensive nature, Esper said at the Pentagon. Yemen's Iran-linked Houthi rebels have claimed responsibility for last week's attacks on major Saudi oil facilities in the eastern province of Buqyaq. But Saudi Arabia and the US suspect that Iran is behind the strikes, which at least initially put a halt to about half of Saudi Arabia's oil output.

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BROKER RATING CHANGES

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DEUTSCHE BANK RAISES WM MORRISON SUPERMARKETS TO 'BUY' (HOLD) - TARGET 235 PENCE

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DEUTSCHE BANK RAISES J SAINSBURY TO 'BUY' (HOLD) - TARGET 275 PENCE

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BERENBERG RAISES PETRA DIAMONDS TO 'HOLD' ('SELL') - TARGET 9 (8) PENCE

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COMPANIES - FTSE 100

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Marks & Spencer Group said Humphrey Singer has decided to step down as CFO and a succession plan is now underway. The clothing, homewares and food retailer said Singer's departure date has not yet been decided and will be confirmed in due course.

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J Sainsbury is set to exit mortgage lending in order to conserve capital and improve the profitability of its banking unit, the Financial Times reported. The supermarket chain had attempted to reduce its operating costs through a GBP12 billion merger with Walmart-owned rival Asda, however the UK Competition & Markets Authority blocked the scheme in April. According to a person with knowledge of the Sainsbury's Bank's plans, mortgage lending has been considered by the group as "very capital intensive, and its a big amount of capital for a small amount of customers", the newspaper reported.

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COMPANIES - FTSE 250

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Sports Direct International said it has made a 5.0 pence cash offer for 5-a-side football-pitch operator Goals Soccer Centres, not already held by the sportswear retailer. Sports Direct is already the largest shareholder in Goals, with a 18.93% stake. In August, Goals put itself up for sale amid its continued investigation into accounting errors related to value-added tax. Goals shares are currently suspended from trading on AIM. Sports Direct said the possible offer would provide Goals shareholders with an exit and allow them to "determine what is fair value and in their best interests". In addition, Sports Direct said it has requested the board of Goals provide customary due diligence materials and urged the Goals board to engage with it in discussing the possible offer.

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COMPANIES - INTERNATIONAL

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Zurich Insurance Group said it has appointed insurance regulator Peter Giger as group chief risk officer. Giger will join the Swiss insurance firm on October 1, replacing Alison Martin. Martin is still with the group but recently was moved to the Europe, Middle East & Africa CEO position. Giger has previously worked for Zurich, between 2010 to 2014, where he was chief financial officer of the company's General Insurance unit. Most recently, Giger was head of insurance and deputy CEO of Swiss financial regulator Swiss Financial Market Supervisory Authority. He left Finma in September last year.

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Monday's Shareholder Meetings

Sosander

Scientific Digital Imaging

Aptitude Software

Northgate

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By Tom Waite; thomaslwaite@alliancenews.com

London Briefing is available to subscribers as an email newsletter. Contact info@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Sainsbury (J) PLC 201.30 GBX -2.28
On The Beach Group PLC 448.00 GBX 1.45 -
Morrison (Wm) Supermarkets PLC 194.40 GBX -0.31
Thomas Cook Group PLC
Petra Diamonds Ltd 8.50 GBX -0.93 -

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Alliance News

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