Shares slump as Thomas Cook seeks bank help

The group said plummeting consumer confidence and the unresolved turmoil in north Africa – a popular destination with holidaymakers from its key markets in France and Russia – had hit the business harder than they expected. Thomas Cook insisted that it was in robust shape but the surprise update spooked investors, causing shares in the FTSE 250 Index company to slump.

Shares in the firm were down about 75 per cent at 10p last night, taking total losses since the start of the year to 95 per cent and leaving the group worth around £100m.

Just four weeks after it agreed an additional £100m in funding headroom to help it cope with the quietest point of its trading year, the tour operator has gone back to its banks to ask for a similar top up. The group – which has postponed Thursday’s publication of its full-year results until after talks with its lenders have concluded – said the move was prudent ahead of December and January, the toughest time of year for the business.

Sam Weihagen, Thomas Cook interim chief executive, insisted the company was a “robust business that has a great future”. “We’re operating business as usual,” he said.

“Flights are leaving on schedule, shops are open and we’re taking bookings.”

But the City was less convinced as shares plunged and some analysts urged investors to sell their holdings.

Wyn Ellis, analyst at Numis Securities, said: “The announcement will be of concern to shareholders, customers and suppliers.

“Thomas Cook is facing a difficult near-term future which could lead to significant loss of market share.”

Thomas Cook said its French and Belgian markets have seen bookings fall by up to 20 per cent in recent trading, while its recent move into the Russian market had “got off to an extremely slow start”. The group has suffered from the impact of the Arab spring, which has hit bookings to Tunisia and Egypt, destinations popular with France and Russia respectively, as well as UK holidaymakers.

Thomas Cook, which is expected to report a 31 per cent slide in underlying profits to £191.1m, is understood to be considering the closure of 200 of its outlets following its recent merger with the Co-op’s UK high street travel businesses.

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Market report: Page 17.