Britain’s Thomas Cook is reportedly in talks with the government and potential investors about a last-minute rescue deal to fend off a corporate collapse that would send shockwaves well beyond the travel sector.
The world’s oldest travel company was fighting for its survival over the weekend after its lenders threatened to pull the plug on a rescue deal that has been months in the making.
Hurt by high levels of debt, online competition and geopolitical uncertainty, Thomas Cook needs to find another 200 million pounds ($250m) on top of a 900 million pound ($1.1bn) package it had already agreed, to see it through the winter months when it needs to pay hotels for its summer services.
A person familiar with the situation told the Reuters news agency the company was in talks with the government and a number of potential investors about bridging the funding gap. It will hold a board meeting on Saturday and Sunday to evaluate its position.
“We have not given up,” the person said, declining to be named due to the sensitivity of the situation.
Were Thomas Cook to fail to find the funds it requires, it could be put into administration, a form of creditor protection that often precedes bankruptcy.
That could spark the largest peacetime repatriation in British history with some 160,000 Britons currently on Thomas Cook holidays in destinations including California, the Caribbean and Corfu.
In total, some 600,000 holidaymakers from markets including Germany and Scandinavia could be stranded. The company’s social media channels are full of customers asking if they will be able to get home.
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.
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. With 21,000 staff, it operates in 16 countries and serves 19 million customers a year.
The company’s demise could affect the economies of its big holiday markets Spain, Greece and Turkey, its shareholders and lending banks, and the landlords of its many British high street stores.
Its largest shareholder is China’s Fosun, which was due to take a central role in the rescue package.
The Department for Transport and the company both declined to comment.