Thomas Cook, the troubled travel company, has scrapped dividend payments to help to shore up its balance sheet after a year that saw its chief executive quit and a sharp fall in its profits and share price.
The tour operator, which has been badly hit by dire trading in the UK and the unrest in the Middle East and Africa, has also moved to reduce its debt burden by selling four assets for £40m and a series of cost-cutting measures in the UK.
Thomas Cook said it has "decided not to declare any further dividend whilst the group rebuilds the balance sheet", though the City had been expecting the grim news on the payout for shareholders.
The group's net debt stood at £1.1bn, as of 31 March, though it said it should be below £900m by the year end on 30 September.
To cut its costs, Thomas Cook is reducing its fleet of 41 aircraft by six and exiting 24 loss-making retail stores at the end of their leases. The group has also sold three hotels and the property of its retail travel business in the Netherlands to raise £40m.
It is seeking to generate up to £200m from asset disposals. Nick Batram, an analyst at Peel Hunt, said: "Management clearly recognises that restoring confidence in the group's financial position is a priority."
Shares in Thomas Cook have lost 79.4 per cent of their value in the past 12 months. Manny Fontenla-Novoa, the group's chief executive since 2007, quit in August after three profit warnings in 2011.
The City is now pencilling in operating profit of between £310m and £320m this year, compared with £391m in 2009-10. On recent trading, the tour operator described its results for July and August as "steady", but said September had been a "more challenging month", particularly for its French business.
Thomas Cook's cumulative UK bookings for this summer were flat and were boosted by a 4 per cent rise in its average selling prices. But it said that reservations for its winter programme are currently down by 7 per cent, which is 2 per cent lower than planned capacity.