177 UK Tour Operators named as Zombies by Plimsoll

177 UK Tour Operators industry are now classified as “Zombie” businesses. These companies have seen their performance deteriorate to such as extent that they now exist merely to pay off their debts and survive.

They are posting growing losses and, despite the obvious freeze in the credit markets, increasing their debts. These Zombie businesses have debts at an average of 70% of turnover – they exist to service their out of control liabilities. Many are also using their suppliers to finance their growing losses, taking twice as long as to pay their bills as the industry average of 26 days.

What's worse is they are falling behind the rest and their productivity is well below the industry average. It’s hard for them to compete as their cost base is just too high. As a result, investment plans have been mothballed meaning their aging assets are further restricting their ability to remain competitive.

So can these Zombies be saved? The first thing they need to do is sort out their immediate finances. They have to convince their banks and suppliers to keep supporting them or not pull the plug. If they can pull that off then the hard work really starts. They urgently need to stem their losses and control costs. The longer it takes them to address these issues, the harder and less likely it is they will ever fix them.

However, there are attractive takeover targets among the Zombies - canny investors could pick up a bargain. Some of these companies, stuck in a zombie state because of their balance sheet, have lots of potential for new owners to turn it around. We picked 109 companies that we feel have the most potential.

Those unable to attract new buyers may have simply had their day. A combination of aging assets, rising losses and increasing debts mean they are unlikely to attract a suitor before the receivers are called. They will be forced back into negotiations with their lenders to buy more time but their future doesn’t look good.

Click here to see how the new Plimsoll Analysis - Tour Operators will give you this key industry findings instantly

It will tell you instantly which companies are prospering in the post recession market place, those taking a big gamble and those in trouble. It gives an instant performance rating on 1000 companies and highlights those ripe for acquisition.

The union representing British Airways cabin crew, Unite, has threatened to increase the intensity of their dispute with the airline.

Earlier this year, BA cabin crew went on strike for a total of 22 days costing the airline approximately £150m. Although facing tremendous losses as well as having to cancel hundreds of flights, BA tried to make the best of a bad situation by bringing in employees from other parts of the company to take over cabin crew duties.

Unite has now warned that any further strike action would include any ground staff currently working for BA, including check-in workers and baggage handlers. Introducing these members of BA staff to strike action could potentially be catastrophic to the company.

The union needs to accept that conditions in the post recession industry are such that the airline simply cannot sustain the level of reward its members have become accustomed to. For example, salaries as a percentage of sales for British Airways are 26% compared to 14% at Virgin and 10% at Ryanair. Without a plausible alternative, the board have to cut staff, remuneration and perks if the airline is to survive.

To see how British Airways compares to other Airlines click here and read the following analysis on the Global Airlines