Breathing space for Thomas Cook with bank deal

The 170-year-old company has agreed a £1.4bn deal with lenders including Royal Bank of Scotland and Barclays, to extend the maturity of its bank loans to 2015.

As a result, the world’s oldest travel group has more time to turn around its business.

The group, which has 1,300 shops, wants to sell £200m of assets over the next 18 months as part of plans to take a chunk out of its near £1bn debt mountain.

Thomas Cook said it was close to agreeing sale and leaseback of between 17 and 19 aircraft, the proceeds of which will be retained by the group.

The group has so far sold assets contributing to a £135m cut to its net debt.

Chief executive Sam Weihagen said: “These actions are an important step in the journey to strengthen confidence and ensure that the Thomas Cook Group will continue to provide customers with wonderful travel experiences for years to come.”

The group has issued a number of profit warnings in the last year and also saw the exit of former chief executive Manny Fontenla-Novoa.

The company was plunged into crisis in November after it went back to its lenders to ask for an additional £100m lifeline, sparking fears of a collapse, but it later secured £200m from its banks.

It has since unveiled a turnaround plan for the UK business, which includes focusing on fewer and better-quality hotels and a drive for more online book -ings.

It said it had received a “good level” of expressions of interest in its Indian business and potential buyers would now conduct due diligence.

Thomas Cook, which reported an uplift in business in March, is banking on stable cash flow from its northern Europe and German businesses, though it said it saw scope for further improvement.

The company reshuffled the management at its under-performing businesses in Canada, Russia and France, where it sees substantial scope to improve results.

It also recently agreed to sell its Explorers Hotel in France, where it said market conditions remained very challenging.

It will seek shareholders approval for that disposal as well as the aircraft deal later this month.