Travel Group Thomas Cook Collapse Negatively Affects Cyprus Credit Rating

After filing for compulsory liquidation, UK flight and holiday provider Thomas Cook Group plc, Moody’s have issued a credit negative for Cyprus banks.

On the grounds that the UK travel company’s closure will debilitate and destabilise the income of companies in Cyprus notable travel industry and related areas will possibly prompt higher credit defaults and loss of business. Bulgaria and Greece will also be adversely affected by the company’s closure.

Many hotels on the island have their own agreement with Thomas Cook, however the balance sheets have been released demonstrating that the company owes significant amounts to hotels for July and August as they typically pay 3 months in arrears.

It worryingly indicated that loans to various companies in hospitality services in Cyprus such as accommodation and food banks amounted to around 16% of their total loans in March 2019. It also noticed that the experts in Cyprus were also looking at how to make a support bundle available for hotels affected worst.

The obligatory liquidation of Thomas Cook and the resultant decrease in the travel industry income and interest in Cyprus, Greece and Bulgaria will debilitate the credit standing of organisations that worked with the now sunken travel company and who depended on installments from it, for example, car rental companies and tours.

The impact of Thomas Cook's liquidation on Cyprus' travel industry area is likely to be extensive. Around a quarter of a million visitors every year travel to Cyprus using Thomas Cook and create income of EUR €200 million.

In 2018, visitors venturing out to Cyprus with Thomas Cook represented around 7% to 8% of the four million holidaymakers on the island.

Finally some good news from the credit agency, Moody's stated that Cyprus is nowhere near at serious risk as Bulgaria and Greece since subsidiary companies with Thomas Cook appear to not be heavily influenced by the company’s almost overnight breakdown.


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