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Thomas Cook in talks to stave off collapse Thomas Cook: plans made for biggest UK peacetime repatriation
(about 3 hours later)
Thomas Cook is holding last-minute talks to stave off a collapse that would trigger the biggest UK peacetime repatriation, with 150,000 people currently on holidays overseas with the travel company. The government and the aviation watchdog are drawing up plans for the biggest UK peacetime repatriation if Thomas Cook collapses, with 150,000 British customers currently on holidays overseas with the travel company.
Britain’s oldest package holiday company, founded in 1841, has held emergency talks to sell its Nordic airline and tour operating divisions in an attempt to raise money. If a £200m hole in its finances is not plugged, Thomas Cook could collapse as early as this weekend. Thomas Cook is holding last-minute talks to stave off a bankruptcy that could happen as soon as this weekend unless it secures £200m in extra funding.
The company’s collapse would put 20,000 jobs at risk, including about 9,000 in the UK. The Civil Aviation Authority, the government-backed regulator, would be forced to pick up the estimated £600m cost of bringing the 150,000 people home. The Department for Transport and the Civil Aviation Authority (CAA) have made initial preparations to bring stranded passengers back to the UK, under a plan known as Operation Matterhorn.
Britain’s oldest package holiday company has held emergency talks to sell its Nordic airline and tour operating divisions in an attempt to raise money.
Thomas Cook on brink, as pound boosted by Brexit deal hopes – business liveThomas Cook on brink, as pound boosted by Brexit deal hopes – business live
The Department for Transport and the CAA have made preparations to bring stranded Thomas Cook passengers back to the UK, a plan known as Operation Matterhorn. Trade unions called on the government to step in, whether directly or by putting pressure on lenders that include state-owned Royal Bank of Scotland.
In a stock exchange announcement on Friday, the company said it was in talks with its banks, bondholders and biggest shareholder. The £200m would be designed to see it through the winter on top of a £900m rescue deal that was close to being finalised. The collapse of Thomas Cook would put 20,000 jobs at risk, including about 9,000 in the UK. The CAA could be forced to pick up some of the estimated £600m cost of covering the flights home – and holidays currently taking place – of 150,000 UK customers abroad. Thomas Cook destinations range from mainland Europe to the Caribbean, the US and the Middle East.
In a stock exchange announcement on Friday, the company said it was in talks with its banks, bondholders and biggest shareholder. The £200m would be designed to see it through the winter on top of a £900m rescue deal close to being finalised.
“Discussions include a recent request for a seasonal standby facility of £200m, on top of the previously announced £900m injection of new capital,” Thomas Cook said.“Discussions include a recent request for a seasonal standby facility of £200m, on top of the previously announced £900m injection of new capital,” Thomas Cook said.
“The recapitalisation is expected to result in existing shareholders’ interests being significantly diluted, with significant risk of no recovery. The company will provide further updates in due course.”“The recapitalisation is expected to result in existing shareholders’ interests being significantly diluted, with significant risk of no recovery. The company will provide further updates in due course.”
The company’s shares fell 21% to a new low of 3.5p. A year ago, the shares were worth 75p.The company’s shares fell 21% to a new low of 3.5p. A year ago, the shares were worth 75p.
Thomas Cook’s banks, led by Royal Bank of Scotland, Barclays and Lloyds, have made a last-minute demand for it to raise new funds. The company is in talks with China’s Fosun International, its biggest shareholder, which had already agreed to supply £450m in return for a majority stake in Thomas Cook’s tour-operating business and a stake in its airline. Thomas Cook’s banks, led by RBS, Barclays and Lloyds, have made a last-minute demand for it to raise new funds. The company is in talks with China’s Fosun International, its biggest shareholder, which had already agreed to supply £450m in return for a majority stake in Thomas Cook’s tour-operating business and a stake in its airline.
The TSSA union, which has members in the branches and offices of Thomas Cook, called on the government to intervene to save “jobs and an iconic brand”.
Manuel Cortes, its general secretary, said: “Thomas Cook must be rescued no matter what. If Thomas Cook goes under, we will be left with just one major travel operator – TUI – controlling the mass market. If need be the government must step in to ensure Thomas Cook’s survival.”
The UK’s pilots’ union called on the government to push RBS and Lloyds, both bailed out by taxpayers during the financial crisis, to support the company.The UK’s pilots’ union called on the government to push RBS and Lloyds, both bailed out by taxpayers during the financial crisis, to support the company.
“It is appalling that banks that owe their very existence to handouts from the British taxpayer show no allegiance to a great British company,” said Brian Strutton, the general secretary of the British Airline Pilots’ Association.“It is appalling that banks that owe their very existence to handouts from the British taxpayer show no allegiance to a great British company,” said Brian Strutton, the general secretary of the British Airline Pilots’ Association.
“The government has a say in this, owning one of the key banks and still with huge influence over the other. RBS and Lloyds should be told by the prime minister to support Thomas Cook.”“The government has a say in this, owning one of the key banks and still with huge influence over the other. RBS and Lloyds should be told by the prime minister to support Thomas Cook.”
Competition from online rivals, as well as one-off factors such as Brexit, have weighed on Thomas Cook’s recovery after its near-collapse in 2011. High prices of jet fuel and hotels have also pushed up costs, while the heatwave in summer last year convinced potential customers to stay at home, with a further effect on earnings.Competition from online rivals, as well as one-off factors such as Brexit, have weighed on Thomas Cook’s recovery after its near-collapse in 2011. High prices of jet fuel and hotels have also pushed up costs, while the heatwave in summer last year convinced potential customers to stay at home, with a further effect on earnings.
The previous biggest UK peacetime repatriation was in 2017 when Monarch Airlines collapsed. The CAA had to organise flights home for 110,000 customers on specially chartered planes.The previous biggest UK peacetime repatriation was in 2017 when Monarch Airlines collapsed. The CAA had to organise flights home for 110,000 customers on specially chartered planes.
Following the demise of Monarch, the government promised to act on airline insolvency rules to ensure taxpayers would not in future pick up the bill to get home.
A review was published earlier this year recommending an additional 50p levy per airline passenger. The government promised to “swiftly introduce the reforms needed to secure the right balance between strong consumer protection and the interests of taxpayers”, but as yet no action has been taken.
Thomas Cook holidaymakers would be Atol protected, meaning their holiday accommodation as well as return flights are effectively guaranteed if they are abroad at the time of a collapse. The CAA’s Air Travel Trust fund, the primary source for meeting Atol obligations for failed companies, is currently worth £170m, with insurance worth another £400m.
About half of Thomas Cook customers have only booked flights and may not come under Atol protection, but the Monarch precedent suggests the government would assume responsibility for bringing them home.
The bill could far exceed the £60m spent on the Monarch rescue operation, with many passengers currently on holiday in the Caribbean and the US.
The CAA said: “We are in regular contact with all large Atol holders and constantly monitor company performance. We do not comment on the financial situation of the individual businesses we regulate.”
Thomas CookThomas Cook
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