Travel group Thomas Cook said it was willing to sell its profitable airline business to raise cash and fund its fight back from a torrid 2018 and signs of a tough year ahead.
The oldest travel company in the world stumbled badly last year when a heatwave in northern Europe deterred holiday makers from booking lucrative last minute deals, leading to two major profit warnings and talk of a need to raise funds.
The British group, which had a market valuation of £540 million and net debt of £1.6 billion, said rather than launch a rights issue it would consider all options for the most successful part of the business.
"Thomas Cook doesn't need to own an airline outright to be a successful holiday company, so long as we retain a strong relationship to provide our customers with the... service they need for their journey," chief executive Peter Fankhauser said.
A sale would enable the company to invest more in its own hotels, improve its digital sales offering and drive further cost savings.
Its airline, which fared much better last year than the tour operator business, consists of Germany's Condor, and UK, Scandinavian and Spanish divisions. Operating 103 aircraft, it had £3.5 billion of revenue and a 37% rise in operating profit to £129 million in 2018.
The airline was insulated as the tour operator pledges to fill many of the airline's seats and makes up the difference if prices have to be slashed to fill them.
It flies from airports such as Gatwick, Stansted and Manchester in Britain, and Frankfurt and Munich in Germany.
Long, Hot Summer
Fankhauser said the review was at an early stage and would include all options. Its shares surged 12%.
Analysts at Credit Suisse said that easyJet could be interested in Thomas Cook's airport slots in Britain and Germany, as well as its Airbus sub-fleet.
Credit Suisse said that Thomas Cook's airline business could be worth between anything between £1.8 billion and £3.2 billion, and that Lufthansa, IAG and Ryanair could all also be interested.
Thomas Cook said it had made progress in managing its cost base and cut capacity to prop up prices, but that summer bookings reflected consumer uncertainty, especially in Britain.
Last year's winter trading was also affected by the long hot summer, with fewer customers willing to book holidays, meaning that average selling prices were down 10%. For this summer, tour operator bookings are down 12% although pricing was slightly higher.
The turmoil at Thomas Cook reflects wider problems in the industry. Rival TUI has slashed its earnings guidance for its fiscal full year as it too suffered from last summer's hot weather, while holiday airline Germania collapsed earlier this week.
As well as the hangover from last year, Fankhauser said that uncertainty over Brexit was impacting British consumer confidence, saying that a page on Thomas Cook's website addressing questions around Brexit had 800 hits a day.
Thomas Cook's underlying loss from operations in the three months to the end of December expanded to £60 million and it said it had met its bank covenant tests. It reiterated its full-year outlook.