HOLIDAY giant Thomas Cook was in turmoil yesterday as shares plummeted 75% amid reports of falling profits and increased borrowing.
The tour operator, which has 120 stores throughout Scotland, has asked lenders to provide £100 million to help it cope with a quiet point in trading – just 32 days after securing a similar amount from banks.
The move comes ahead of an expected announcement of a 31% downturn in profits to £191.1m, but the group claimed the additional borrowing was prudent ahead of December and January, the toughest time of year for the business.
The firm added that falling consumer confidence and turmoil in north Africa – a popular destination with holidaymakers in France and Russia – had hit the firm harder than expected.
However, a spokesman for Thomas Cook, which operates flights from Edinburgh, Aberdeen and Glasgow, yesterday insisted the company would carry on as normal.
Sam Weihagen, interim chief executive, said the tour operator was a “robust business that has a great future”. He added: “We’re operating business as usual. Flights are leaving on schedule, shops are open and we’re taking bookings.”
Some investors and analysts were less convinced. Wyn Ellis, of Numis Securities, said: “Thomas Cook faces a difficult near-term future which could lead to significant loss of market share.”
James Hollins, analyst at Evolution Securities, added: “Legitimate questions will be asked as to whether Thomas Cook can survive long-term.”
However, Barrhead Travel chairman Bill Munro claimed there was “no possibility” of the firm going out of business.
He said: “At the moment, my understanding is that they’re still on target to make a substantial profit.”
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