Shares in holidays giant Thomas Cook have plunged after it admitted dire trading had forced it back to its banks for more 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.
Thomas Cook insisted it was in robust shape but the surprise update spooked investors, causing shares to slump 75%, or 30.9p lower at 10.2p, making it the biggest faller in the FTSE 250.
Its shares were 95% lower than at the start of the year, giving it a market value of just £96m.
Just four weeks after it agreed an additional £100m in funding headroom 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 Thursday'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 company was a “robust business that 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 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.
Thomas Cook said its French and Belgium markets have seen bookings fall by up to 20% in recent trading, 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, destinations popular with France and Russia respectively, as well as UK holidaymakers.
Russian bookings to Thailand have also been knocked by 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 payments and Mr Weihagen said talks with lenders were an act of “prudence”.
In addition, the company is looking to raise £200 million from the sale of assets such as hotels and its stake in Britain's air traffic control service.
The announcement hit sentiment towards the wider sector with industry leader and Thomson Holidays owner TUI Travel falling nearly 10%.
James Hollins, analyst at Evolution Securities, said a previous description of the travel industry as “awful” was not “negative enough” and urged investors to sell their stock. He said: “Legitimate questions will be asked as to whether Thomas Cook can survive long-term.”
However, Mr Hollins said the business could survive given the strong performance outside the UK.