Thomas Cook takes axe to its dividend

THOMAS Cook yesterday ditched its dividend as it tries to shore up its finances before a series of banking covenant tests in December.

The travel firm has been hit by the consumer downturn in the UK and unrest in the Middle East and north Africa regions.

Thomas Cook has issued a series of profit warnings this year, which triggered the resignation of chief executive Manny Fontenla-Novoa in August.

Thomas Cook chief financial officer Paul Hollingworth said: “The board will not declare any further dividend payments as it rebuilds the balance sheet.

“The group is focused on improving its financial flexibility, particularly around the seasonal cash low point at the end of December.”

He said that the Thomas Cook would pay its previously declared interim dividend of 3.75p in October.

Thomas Cook said it would cut its UK fleet of 41 aircraft to 35 and is considering the closure of 24 loss-making retail stores at the end of their lease periods.

However, its merger with Co-op travel shops will still go ahead, making it the UK’s largest chain of travel agents.

It also axed 500 hotels from its portfolio and added 100 others, which it hopes will stimulate more business.

The company also announced that it had made Peter Marks, chief executive of the Co-operative Group, a non-executive director.