Thomas Cook told to find £200m as it tries to stave off collapse
If the travel giant goes under, an estimated 180,000 people could be stranded abroad.
Tour operator Thomas Cook has confirmed it is seeking £200 million in extra funding as it attempts to prevent a collapse.
The company said it is in talks with stakeholders, including leading shareholder Fosun, to bridge the funding gap to stave off entering administration.
Sources have told the PA news agency the firm’s lending banks, including RBS, demanded the extra £200 million to provide further contingency.
Sources added that Thomas Cook has “days rather than weeks” to secure the extra cash.
It is understood Thomas Cook had found a third party to provide the extra £200 million, but is now rapidly hunting cash after that party backed out.
In an update to the market, Thomas Cook said the fundraiser is expected to significantly dilute existing shareholders’ stakes in the firm, with “significant risk of no recovery”.
If the company goes under, an estimated 180,000 people could be stranded abroad, while the firm employs 22,000 staff around the world including 9,000 in the UK.
Thomas Cook said the £200 million needed would be a “seasonal standby facility”, on top of £900 million it had already raised from Chinese firm 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.
An RBS spokesman said: “As one of a number of lenders, RBS has provided considerable support to Thomas Cook over many years and continues to work with all parties in order to try and find a resolution to the funding and liquidity shortfall at Thomas Cook.”
Brian Strutton, general secretary of the British Airline Pilots Association (Balpa), said: “It is appalling that banks that owe their very existence to handouts from the British taxpayer show no allegiance to a great British company, Thomas Cook, when it needs help.
“This puts 9,000 good quality UK jobs needlessly at risk and puts an iconic British brand in jeopardy.”
The 178-year-old firm could go bust by Sunday, company insiders have reportedly told the Daily Mail.
The paper also said that Government officials have drawn up plans for what would be “Britain’s biggest peacetime repatriation” if the firm goes under.
Known as Operation Matterhorn, it has been put together by the Department for Transport (DfT) and the Civil Aviation Authority, the paper said.
A DfT spokeswoman said: “We do not speculate on the financial situation of individual businesses.”
Unite the Union, which represents nearly 3,000 cabin crew and engineers at Thomas Cook’s airline, called on the Government to intervene, saying the airline is viable both financially and operationally and warned that the removal of it operator licence would be nothing short of ‘economic vandalism.’
Unite assistant general secretary Diana Holland said: “It is clearly in the best interests of the employees, customers and the taxpayer for the airline to continue operate. This is viable, profitable business with a world class workforce. Any revoking of its operating licence would be an act of economic vandalism, the bill for which would needlessly land on the shoulders of UK taxpayers.”
In the High Court last month, barrister Tom Smith QC, who led Thomas Cook’s legal team, told Mr Justice Norris that the 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.
Shares in the company dived 20.5% to 3.5p in early trading on Friday.
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