Frankfurt Thomas Cook Group Plc gained a three-year funding lifeline worth £1.4 billion (Dh8.3 billion) Saturday, giving the world's oldest travel group more time to turn around its recession-scarred business.

The 170-year-old firm issued three profit warnings last year due to young families with children cutting back on holidays and has been forced to consider a raft of fund-raising proposals.

Groaning under £890 million of debt, it secured a £200 million rescue package from its lenders in November, started selling assets and reviewed its under-performing businesses.

In the new agreement, Thomas Cook's lenders extended the financing to May 31, 2015.

The firm, which did not specify the previous expiry date on the financing, said they had raised the interest margin on £1.2 billion of funds to 3.5 per cent over Libor, without saying what the margin was before.

The lenders, which include Royal Bank of Scotland Group Plc, will also receive warrants to subscribe for new Thomas Cook shares representing about 5 per cent of issued share capital and will be entitled to a 1 per cent amendment fee.

"This bank agreement, together with these actions, places Thomas Cook on a much firmer footing," Thomas Cook chairman Frank Meysman said.

Chief executive quits

Thomas Cook endured a dire 2011 during which a sales slump caused more than half a billion euros in losses and culminated in the departure of veteran chief executive Manny Fontenla-Novoa in August.

Meysman said the search for a new CEO was progressing well.

Thomas Cook said it was in advanced talks to sell and lease back 17 to 19 aircraft as part of its disposal programme to get cash and boost liquidity. It said it had received a "good level" of expressions of interest in its Indian business, and potential buyers would now conduct due diligence.

Selling assets

It also recently agreed to sell its Explorers Hotel in France, where it said market conditions remained very challenging. It will seek shareholders' approval for that disposal as well as the aircraft deal this month.

Thomas Cook, which reported an uplift in business in March, is banking on stable cash flow from its Northern Europe and German businesses, though it said it saw scope for further improvement there by increasing online sales and reducing costs.

It reshuffled management at its under-performing businesses in Canada, Russia and France, where it sees substantial scope to improve results. It also said yesterday a plan to turn around its UK business was under way and progressing well.