Thomas Cook is expected to shed 1,000 jobs after agreeing that it would shrink its operation in order secure a life-saving £200m bank loan.
Shares in the troubled travel giant immediately climbed 55% on the news that its bankers had stumped up the additional cash needed to see Cook through the quieter winter months.
Issuing a statement late on Friday evening, it said it had secured the cash until 30 April 2013.
But the loan, which replaced the short-term £100m facility agreed in October, will cost Cook an additional £10m in fees and its interest rate on its borrowings will double to 5% next year. The deal also gave the banks the right to take up almost 5% of shares in the business of the next three and a half years.
Cook also agreed to abandon further acquisitions and reduce capital spending, further details of which are likely to be confirmed when the group announced its preliminary financial results in mid-December. They are expected to include job losses and shop closures.
Cook said the additional cash had provided it with "much increased headroom to deal with unexpected events and the effects of an uncertain economic environment".
“I am absolutely delighted that we have reached agreement and I would like to thank the banks for acting so swiftly," said group chief executive Sam Weihagen.
"Over the last few days, we have been overwhelmed by the messages of support from our holidaymakers, suppliers and partners and I would like to thank them for their good wishes and our employees for their hard work and dedication.
"For over 170 years Thomas Cook has provided customers across the world with fantastic travel experiences. Today they can look forward confidently to holidays with us for many years to come.”
by Bev Fearis and Linsey McNeill
