Debt-hit Thomas Cook in fight for survival after number of bookings slumps

• UK business has accumulated debts of nearly £1 billion
• Publication of full-year results have been delayed as it requests more credit
  
• Arab Spring blamed for plunging profits in Tunisia and Egypt
• Interim chief exec insists it's 'business as usual' and the firm is 'robust'
  

By Sean Poulter

Holiday giant Thomas Cook is struggling for survival following a slump in bookings and fears it is having difficulty repaying bank loans totalling £1billion.

The firm, founded in 1841, is under threat as families cut back on sunshine holidays.

The value of shares in the company, now German-owned, slumped by 75 per cent yesterday after it said it is talking to banks about re-financing its debts.

Vulnerable: The latest announcement comes after reports that Thomas Cook could close 200 travel agencies

Earlier this year the company revealed a drop in bookings and issued three profit warnings.

The firm, which was the world’s first package holiday company, sells 22million trips a year to families in Britain and 20 other countries.

Executives yesterday insisted that trading is robust and there is no danger to the holidays or travel plans of its millions of British customers.

But James Hollins, analyst at investment bank Evolution Securities, said: ‘Legitimate questions will be asked as to whether Thomas Cook can survive long-term.’

Package holiday pioneer: An advert from 1936 when most breaks were no further from home than the English coast

Bosses are looking at immediate cost cutting measures, including closing more than 200 of its travel agent outlets on high streets, threatening thousands of jobs.

The company, Europe’s second biggest tour operator after TUI Travel, suddenly parted company with its chief executive, Manny Fontenla-Novoa, in the summer.

The new interim chief executive, Sam Weihagen, said that trading had deteriorated in recent months, with poor bookings for this winter and for summer next year.

He blamed the lack of bookings on the eurozone crisis and resulting financial turmoil which has led to families abandoning luxuries, including foreign holidays.

Unrest caused by the Arab Spring especially in Egypt and Tunisia – popular destinations with holidaymakers from its key markets in the UK, France and Russia – had also hit the business harder than expected.

Despite the collapse in the share price, which meant it is down 93 per cent since January, Mr Weihagen insisted the company is a ‘robust business that has a great future’.

The group insisted it had not fallen behind with any of its bank loan repayments and Mr Weihagen said the talks with its lenders were an act of ‘prudence’.

Cutbacks: The holiday giant is to reduce its plane fleet by six aircraft

He added: ‘We’re operating business as usual. Flights are leaving on schedule, shops are open and we’re taking bookings.’

The travel industry trade body, ABTA, also reassured consumers, saying all flights and package holidays sold by the firm are protected.

ABTA spokesman Victoria Bacon insisted that customers can continue to make bookings for next year with confidence.

‘The key thing is that anyone who has booked a holiday with them is protected,’ she said. ‘People can go ahead and book as normal.’

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