British tour operator Thomas Cook is struggling for survival after the number of bookings had fallen and fears the company are having difficultly repaying bank loans of £1billion.
Yesterday shares in the German-owned company slumped by 75 per cent after the company revealed they were seeking new agreements with its creditors.
Three profit warnings were issued earlier this year after the company revealed bookings were down.
In the past year the firm sold 22million trips to families in Britain and 20 other countries.
James Hollins, an analyst as investment bank Evolution Securities said, “Legitimate questions will be asked as to whether Thomas Cook can survive long-term”.
In cost cutting measures bosses plan to close more than 200 of its travel agent outlets on high streets, axing thousands of jobs.
Sam Weihagen the new interim chief executive said that trading had declined in the recent months, with bookings for the winter and next summer being poor.
The chief executive blamed the lack of bookings on the Eurozone crisis, which has resulted in financial turmoil, meaning families have cut on luxuries including foreign holidays.
Mr Weihagen said the company is a “robust business that has a great future”. This is following the collapse in share price, which since January is down 93 per cent.
He insisted the company had not fallen behind with bank repayment and the talks with its lenders were an act of ‘prudence’.
Travel industry trade body ABTA reassured Thomas Cook customers that flights and package holidays sold by the firm were protected.
Victoria Bacon, a spokesman for the company said, “the key thing is that anyone who has booked a holiday with them is protected. People can go ahead and book as normal”.
Article by Charlotte Greenhalgh