SHARES in holidays giant Thomas Cook plunged yesterday after it admitted dire trading had forced it back to its banks for more financial 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 expected.
The firm insisted it was in robust shape, but the surprise update spooked investors – causing shares in the FTSE 250 Index company to slump by 75% from 30.9p to 10.2p.
It now has a market value of just £120m after that statement and a series of profit warnings left shares 93% lower on the start of the year.
Just four weeks after it agreed an additional £100m 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 postponed tomorrow’s publication of its full-year results until 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 firm 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 turning the business around would be tough as holiday suppliers are likely to be more wary of committing their products to the company.
He said: “The announcement will be of concern to shareholders, customers and suppliers. Thomas Cook faces 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%, 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.
The violence and turmoil in Egypt has shown no signs of desisting as thousands of activists continue to occupy Tahrir Square in Cairo in protest at the slow pace of political change.
Russian bookings to Thailand have also been knocked by recent severe flooding in the capital Bangkok.
Thomas Cook is expected to report a 31% slide in underlying profits to £191.1m following a year which saw numerous profits warnings and the exit of its chief executive, Manny Fontenla- Novoa.
The dismal year prompted the holiday group, which at the end of last year had 31,000 staff, to axe its dividend as it moves to repair its battered finances, which include debts of around £900m. The group insisted it had not fallen behind with any of its payments.