Udayavni Special

Thomas Cook fails to find private funds to avert collapse: Source


Team Udayavani, Sep 21, 2019, 6:36 PM IST

London: Iconic British travel firm Thomas Cook has failed to find further private investment to stave off collapse and is now relying on an unlikely government bailout, a source close the matter told AFP on Saturday.

The operator said Friday that it needed USD 200 million in addition to the USD 900-million rescue deal secured last month or else face administration, which could potentially trigger Britain’s largest repatriation since World War II.

A source close to the negotiations told AFP that the company had failed to find the USD 200 million from private investors and would collapse unless the government intervened.

But ministers are unlikely to step in due to worries about the pioneering operator’s longer-term viability, the Times reported on Saturday, leaving it on the brink of collapse and stranding up to 150,000 British holidaymakers abroad.

“We will know by tomorrow if an agreement is reached,” the source told AFP.

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 USD 60 million on hiring planes.

The government at the time described it as Britain’s “biggest-ever peacetime repatriation”.

Thousands of workers could also lose their jobs, with the 178-year-old company employing about 22,000 staff worldwide, including 9,000 in Britain.

Chinese peer Fosun, which was already the biggest shareholder in Thomas Cook, agreed last month to inject USD 450 million into the business.

In return, the Hong Kong-listed conglomerate acquired a 75-per cent stake in Thomas Cook’s tour operating division and 25-per cent of its airline unit.

Creditors and banks agreed to inject another USD 450 million under the recapitalisation plan announced in August, converting their debt in exchange for a 75-per cent stake in the airline and 25 per cent of the tour operating unit.

Thomas Cook in May revealed that first-half losses widened on a major write-down, caused in part by Brexit uncertainty that delayed summer holiday bookings.

The group, which has around 600 stores across the UK, has also come under pressure from fierce online competition.

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