Thomas Cook gets £200m credit lifeline

By Nick Eardley
Published on Sunday 27 November 2011 00:00

THE boss of Thomas Cook sought to alleviate fears over the future of the struggling holiday giant yesterday, hours after it secured a £200 million lifeline from creditors.

The firm’s chief executive, Sam Weihagen, told customers that the company, which is more than 170 years old, remains a “safe pair of hands”, and predicted it would exist for another 170 years after the firm received financial help.

Weihagen said he was “delighted” with the latest loan, which was agreed early yesterday after days of uncertainty, and said it could be paid off within the next 12 months.

There had been concern that the company could run out of money over the next few days if more cash was not made available.

Shares plummeted by 75 per cent after it announced plans last week to go back to the banks to seek a new deal, despite agreeing to a £100m funding deal with banks in October. Bookings have fallen by almost a third since the surprise announcement on Tuesday.

Thomas Cook, which sells more than 22 million holidays to UK customers every year, was hit badly by unrest in North Africa and low customer confidence.

The deal announced yesterday will give the company more leeway during periods of poor sales and will last until the end of April 2013.

But Weihagen refused to rule out job losses and shop closures, saying the company wanted to ensure the stores it ran were profitable.

He added: “Thomas Cook today is an even stronger and more confident company. You can be sure that your holiday really is in safe hands with us.”

He thanked staff for working to ensure there had been “absolutely no impact at all on the holidays and services” provided over the past few days.

Weihagen also sought to calm fears that the firm’s brand had been tarnished by recent publicity, saying that with the “security” afforded by the latest deal he saw no “reason why all at all” why customers would stop booking with the firm.

The loan could be repaid within just 12 months. “If there was any doubt about our financial position we can assure all holidaymakers we’re very robust and are in very good shape going forward,” Weighan added.

Although the company has seen steady bookings outside Britain, sales in the UK have performed badly. Weighan said management in the UK had been changed and a “turnaround” plan produced, adding: “It may take two to three years to come back to an acceptable profitability.”

The company emailed customers yesterday, saying: “All our package holidays are financially protected which means you can book your holiday with complete confidence.”

“As a travel company with over 170 years of experience, our customers have always been our first priority and continue to be so.”

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