Slump in customer bookings adds to woes at Thomas Cook

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ANALYSTS have warned that bosses at Thomas Cook face an uphill struggle after the company suffered a 30 per cent drop in UK sales following the announcement of its financial troubles.

The world’s oldest travel firm secured a rescue package from its lenders on Friday following days of talks.

However, analysts said the damage to the company was severe.

Peel Hunt analyst Nick Batram said: “Trading was challenging enough, but this could have been further exacerbated by the events of the past week,”

Shares in Europe’s second-biggest travel firm by sales rose yesterday, although the gains were partially pegged back as investors digested details of the travel firm’s emergency loan.

Thomas Cook, which had issued a string of profit warnings over the past year, blamed the slump in bookings by British customers on uncertainty over the company’s future. “We were down 30 per cent on bookings which is of course substantial but, on the other hand, it could have been much more had our customers not shown loyalty to us,” acting chief executive Sam Weihagen said in an interview.

Thomas Cook said on Friday that its banks, led by Barclays , HSBC, RBS and UniCredit, had agreed to provide a new £200m ($310m) facility available until April 2013.

It replaces a £100m short-term facility announced in Octo- ber.

The banks have also agreed to relax the terms of upcoming tests of its financial health.

Thomas Cook will pay about six per cent interest on the loan, rising 0.5 per cent every quarter. Evolution analyst James Hollins said that was a “high price but not extortionate”.

Mr Hollins estimates that the new facility pushes Thomas Cook’s gross debt up to around £1.5bn, but said the timing of the company’s latest difficulties gives it time to restore confidence ahead of the key post-Christmas booking period.

“Fortunately, all the bad press has come at a relative low point in the booking cycle and the group has the funds and time to restore partner and consumer confidence in its brand and survival,” Mr Hollins said.