Thomas Cook faces battle to regain confidence

Mon Nov 28, 2011 7:37am EST
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By Matt Scuffham

LONDON (Reuters) - Thomas Cook (TCG.L: Quote) faces an uphill task to restore the confidence of customers and investors ahead of the new year booking season after revealing a 30 percent drop in UK sales in the days following news of its financial troubles.

The world's oldest travel firm secured a rescue package from its lenders late Friday following days of frantic talks, but analysts say the damage is severe.

"Trading was challenging enough, but this could have been further exacerbated by the events of the past week," said Peel Hunt analyst Nick Batram.

Shares in Europe's second-biggest travel firm by sales rose by as much as two-thirds of their value in early trade on Monday, although the gains were partially pegged back as investors digested details of the travel firm's emergency loan.

The stock, which has lost nearly 90 percent of their value over the past year, was up 33 percent at 24.02 pence at midday.

The company's battered bonds -- a 7.75 percent 300 million pound 2017 bond and a 6.75 400 million euro bond maturing in 2015 -- recovered to around 48 pence in the pound, according to Tradeweb, having sunk to 30 last week.

Thomas Cook, which had issued a string of profit warnings over the past year, blamed the slump in bookings by British customers on uncertainty over the company's future.

"We were down 30 percent on bookings which is of course substantial but, on the other hand, it could have been much more had our customers not shown loyalty to us, Acting Chief Executive Sam Weihagen told the BBC in an interview Saturday.   Continued...