Thomas Cook shares crash 75%

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Thomas Cook shares crashed 75 per cent on Tuesday as Europe's second biggest travel firm said it was renegotiating terms with banks after a sharp drop in business, forcing a delay to its annual results.

The British company's share price plunged 75.2 percent to close at 10.2 pence on London's second-tier FTSE 250 shares index, leaving the group valued at just £89.25 million (103.4 million euros, $140 million).

Europe's second-biggest travel firm after rival TUI Travel has suffered a disastrous year, leading to the resignation of its chief executive Manny Fontenla-Novoa in August.

Plunging consumer confidence and turmoil in the Middle East and North Africa region -- popular areas with holidaymakers from France and Russia -- have hit the company much harder than expected.

Thomas Cook said in a statement on Tuesday that it was in discussions with banks over restructuring the group's debt.

"As a result of deterioration of trading in some areas of the business in the current quarter, and of its cash and liquidity position since year-end, the company is in discussions with its principal lending banks with regard to its facilities during the seasonal low period of cash in the business," it said.

"While the company currently remains in compliance with its financing covenants, it also intends to seek agreement from its lending banks to adjustments that will improve its resilience if trading conditions remain difficult."

Thomas Cook added that it would delay its full-year results that had been due on Thursday until conclusion of the bank discussions.

Despite its problems, the group on Tuesday said it expects to report a headline operating profit for the 12 months to September.

Interim chief executive Sam Weihagen insisted that the firm 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."

However, analysts remain far from convinced about the outlook for the crisis-hit travel operator.

"The announcement will be of concern to shareholders, customers and suppliers," said Numis Securities analyst Wyn Ellis.

"Thomas Cook faces a difficult near-term future which could lead to significant loss of market share."

Fontenla-Novoa resigned as chief executive earlier this year after presiding over three profit warnings linked to unrest in key holiday destinations Egypt and Tunisia and a poor performance in the British division.

Violence in Egypt meanwhile showed no signs of ending soon, with protesters this week clashing with police in Cairo to demand an end to military rule.

Thomas Cook's Thailand holiday bookings have also been slammed by recent severe flooding in Bangkok, while media reports suggest that the group is looking to sell 200 of its stores.

The company had already suffered in 2010 due to weak demand for holidays following the worldwide recession.

Last year, Thomas Cook and the Co-operative Group merged their travel shops and foreign exchange businesses to slash costs.