Thomas Cook ‘to close 200 high street travel agencies’

The overhaul of its UK business, which has lagged behind the company’s more successful operations in Scandinavia and Germany, follows the recent merger of Thomas Cook and the Co-op’s UK high street travel businesses.

The tie-up created the UK’s largest high street travel agent and second largest foreign exchange group with over 1,200 shops.

Thomas Cook has about 75 stores across Yorkshire.

A Sunday newspaper said that City analysts expected the potential closures to be announced as part of a wider review of UK operations due alongside full-year results on Thursday.

It may also take a big write-down on the value of assets as it looks to clear the decks for an incoming chief executive.

Manny Fontenla-Novoa, who had been in charge since Thomas Cook’s 2007 merger with MyTravel, left the group in August after three profit warnings in a year triggered an 80 per cent slump in its share price.

Deputy chief executive Sam Weihagen is in temporary charge but will reportedly waste no time in ordering a review of Thomas Cook’s brand portfolio as it looks to move away from cheap package holidays, where profit margins are weak.

It has already announced it is reducing its current fleet of 41 aircraft by six to better meet capacity, while it is also reviewing call centre rostering to improve efficiency.

And the company is looking to raise £200m from the sale of assets such as hotels and its stake in Britain’s air traffic control service.

It is Europe’s second biggest tour operator after TUI Travel, selling more than 22 million holidays a year in the UK.

Last month, Thomas Cook said it had amended the terms of existing bank facilities and agreed a new £100m short-term credit line to tide it over during December when trading is traditionally quiet.

Peel Hunt analyst Nick Batram said the deal had allayed fears Thomas Cook would ask shareholders for fresh funds.

Thomas Cook scrapped its dividend in September as part of efforts to cut its debt substantially over the next two to three years.

The company said that under the deal the terms of an existing £150m loan and a £850m credit facility maturing in May 2014 had been amended, setting less onerous caps on how much debt and debt-related charges it could carry relative to earnings.

In return for the easing in lending terms, Thomas Cook has agreed to restrictions on acquisitions, a prohibition on dividends and to use the proceeds from any disposals to reduce its loans.

The interest margin it pays on its borrowings also increased by half a percentage point.