Thomas Cook appeals for UK state cash
September 21, 2019
UK travel firm Thomas Cook has asked the British government for financial aid to fend off collapse, British media reported on Saturday.
The decision to request a state bailout followed a threat by its bankers RBS and Lloyds to pull out of a 900 million-pound (€1 billion, $1.1 billion) recapitalization plan, according to the Financial Times (FT).
The country's second-largest travel operator has not commented on the reports or whether it could go out of business as early as this weekend.
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If the travel agency goes into administration — a form of creditor protection that often precedes bankruptcy — around 150,000 British holidaymakers will be stranded abroad. That could potentially trigger the UK's largest repatriation since World War II.
Impact could be wider
In total, some 600,000 holidaymakers from markets including Germany and Scandinavia could be stranded.
The firm's collapse would also prompt thousands of job losses; it employs 22,000 staff worldwide, including 9,000 in Britain.
Thomas Cook has struggled in recent years under intense competition in popular destinations, high debt levels and an unusually hot summer in 2018 that reduced last-minute overseas bookings.
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Britain's exit from the European Union, initially scheduled for March 29 but delayed, prompted tens of thousands of tourists to put off their holiday plans.
Thomas Cook had requested an extra 200 million pounds from stakeholders to finish a restructuring plan agreed with its Chinese shareholder Fosun last month.
The FT, citing two people briefed on the situation, said the firm had been locked in talks with "multiple" potential investors but had failed to agree a final plan.
Hedge fund 'pulled out'
Sky News reported that the hedge fund CQS Management had walked away from the rescue deal.
Several UK media outlets, meanwhile, speculated that ministers were unlikely to come to the travel agency's aid.
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The British government and airline regulator have already drawn up plans in case they need to step in to bring customers home. But the fallout from any collapse would go far beyond the interrupted holidays of its customers.
The big tourism economies of Spain, Greece and Turkey could be affected, along with its major shareholders and lending banks.
Two years ago, the collapse of Monarch Airlines prompted the British government to take emergency action to return 110,000 stranded passengers, costing taxpayers some 60 million pounds on hiring planes.
Normal operations
Responding to concerned customers on Twitter on Saturday, the company said it was still "operating as normal."
Founded in 1841 with a local rail excursion in Britain, Thomas Cook runs hotels and resorts, airlines, cruises and hundreds of high street travel agent stores. It operates in 16 countries and serves 19 million customers a year.
mm/jlw (AFP, AP, dpa, Reuters)