|Thomas Cook has been hit hard by the unrest in Middle East and the global economic downturn [GALLO/GETTY]|
Shares in Europe’s second-biggest holiday firm have fallen sharply, after it issued a profit warning and postponed publication of its results.
Thomas Cook shares were down more than 75 per cent late on Tuesday morning as the company, which was founded in the UK, said it was looking to borrow more money.
Analysts said the move threw into question the future of the 170-year-old firm, which provides holidays for 19 million customers each year and employs 30,000 staff.
Several small British travel firms have gone under since the global economic crisis hit in 2008, with weak consumer demand as people continue to worry about their jobs.
Last month, the company said it had announced a new $156m credit agreement with bankers.
The company said it is now attempting to arrange another $156m in credit.
As of September its net debt was just under $1.4bn. The new loan would take the figure to more than $1.56bn.
Hit by unrest
Unrest in Tunisia, normally the top winter destination for French travellers, and Egypt, flooding in Bangkok and disappointing sales in Russia have all added to negative pressure, said the company.
Analysts said the financial troubles could scare away customers, darkening the firm’s prospects even more.
“Legitimate questions will be asked as to whether Thomas Cook can survive long-term,” said analyst at Evolution Securities James Hollins.
He added that he believed the company could pull through on the strength of businesses outside Britain, but “a more flexible financial structure and massive turnaround are required.”.
But Sam Weihagen, Thomas Cook’s interim chief executive, said it was business as usual.
“Flights are leaving on schedule, shops are open and we’re taking bookings,” he told reporters.
Weihagen also said people who booked package holidays with the firm would be protected by the Air Travel Organisers’ Licensing insurance programme, which is funded by contributions from travel companies.
However, those who book only flights are advised to buy their own travel insurance.
Thomas Cook has previously announced plans to reduce its fleet of 41 aircraft to 35, and it hopes to raise $312m by selling assets, including its stake in Britain’s part-privatised air traffic control service.