File photo dated 19/05/16 of a Thomas Cook logo on an aeroplane. Troubled travel company Thomas Cook has agreed the key terms to a rescue deal with Chinese firm Fosun, lenders and bondholders to secure the company's future.
Thomas Cook, which employs 22,000 staff including about 9,000 in the UK, is battling to secure the terms of a complex refinancing agreement to stop Britain’s oldest travel agent from going under.
The 178-year-old travel agent with thousands of staff in 16 countries is attempting an urgent £900 milion restructure.
The firm, founded in 1841, is attempting a last-ditch fire-sale in a bid to stave off collapse and avert the biggest-ever peacetime repatriation of British citizens.
The travel giant which has blamed over £1.6 billion debt, as well external difficulties such as Brexit and instability in Turkey could go into administration as early as this weekend.
If that happened as many as 180,000 tourists could be left stranded abroad.
The taxpayer would be left with a huge £600 million to bring home 180,000 stranded customers, industry experts estimate. That would be ten times the cost when Monarch went under.
Which has led to calls to help save the travel giant with the lesser – but no less eye-watering sum of £200 million for the rescue package to go ahead.
Thomas Cook package holidays are protected by ATOL, which means customers would be flown home and refunded any cancelled holidays for free.
However many travelers who have only bought flights from Thomas Cook would not be protected by the ATOL scheme.
The firm is reeling from £1.6billion of debt, dating back to its takeover of MyTravel in 2007. It has to sell three million holidays a year just to cover the interest.
Other factors are the big shift in people arranging holidays themselves online and Brits avoiding booking holidays due to concerns over Brexit.
A rescue deal with Thomas Cook’s largest shareholder Chinese company Fosun and a group of hedge funds which owned its bonds was announced in July.
But RBS and other banks who have are lending money to the travel giant are demanding an extra £200 million be pumped into the rescue package, the Daily Mail reports.
The company said it is in talks with stakeholders, including leading shareholder Chinese firm Fosun, to bridge the funding gap to stave off entering administration.
In an update to the market, it said the fundraiser is expected to significantly dilute existing shareholders’ stakes in the firm, with “significant risk of no recovery”.
Thomas Cook said the £200 million needed would be a “seasonal standby facility”, on top of £900 million it had already raised from Fosun and its lenders.
The travel firm has suffered recently as a result of mounting debts, reporting a £1.2 billion net debt in its half-year results in May.
It has also been hit hard by an influx of online competitors which has resulted in oversupply, forcing tour operators to cut prices.
The 178-year-old firm could go bust by Sunday, company insiders have allegedly told the Daily Mail.
The paper also said that government officials have drawn up plans for what would be “Britain’s biggest peacetime repatriation”.
Known as Operation Matterhorn, it has been put together by the Department for Transport and the Civil Aviation Authority, the paper said.
A Department for Transport spokeswoman said: “We do not speculate on the financial situation of individual businesses.”
In the High Court last month, barrister Tom Smith QC, who led Thomas Cook’s legal team, told Mr Justice Norris that the Thomas Cook group had a “net debt position” of around £1.25 billion.
He said a planned deal with Chinese tourism group Fosun would involve an injection of £900 million of “new money”.
Mr Smith said Thomas Cook had suffered because of a “general economic downturn”, declining consumer confidence, increased competition from lower cost rivals, the effects of a heatwave in 2018, “environmental concerns” and the weak performance of sterling.
