Thomas Cook Group asks for government bailout
Thomas Cook Group asks for government bailout as it teeters on brink of collapse.
Thomas Cook group has made a last-ditch appeal for a taxpayer-funded bailout amid fears it could enter administration this weekend.
There are major concerns that the 178-year-old travel giant could go bust as it desperately looks to make up a £200 million shortfall.
A collapse would see 150,000 UK holidaymakers stranded overseas and throw the travel plans of many others into jeopardy.
Frantic customers have been making queries to Thomas Cook holidays to find out what is likely to happen to their trips.
They have hours to get home or face being stranded and facing a wait of weeks for a return flight.
The situation is so serious that the Department for Transport and the Civil Aviation Authority (CAA) has set up Operation Matterhorn. Which would see the biggest ever peacetime repatriation.
Thomas Cook Group, which employs around 22,000 people worldwide, has become saddled with £1.6 billion of debt.
Uncertainty over Brexit, last summer’s heatwave and competition in popular destinations have been named as the main reasons for the high levels of debt.
The world’s oldest travel firm struck a deal in July with its biggest shareholder, Chinese conglomerate Fosun, as well as its banks.
They agreed to stump up £750 million to save the debt-laden firm from bankruptcy. This was topped up by £150 million from other key backers to see it through the winter.
The banks, led by RBS and Lloyds, are now insisting the firm finds another £200 million to see it through the low season or they will pull the plug on the rescue deal.
The next 24 hours are now crucial to the firm’s survival and it has approached the government for help. After giving up hopes of a private sector deal.
The Times has said the government is unlikely to intervene amid concerns about the longer-term viability of the company.
The board of the troubled tour operator will meet tomorrow but a source close to the talks has said it was ‘more likely than not’ that it would enter administration.
Another reason for the urgency is that Thomas Cook’s Air Travel Organiser’s Licence (Atol) is up for renewal at the start of next month.
It is illegal to operate without it.
The Department for Transport said: ‘We do not speculate on the financial situation of individual businesses.’
Currently there are 600,000 Thomas Cook customers on holiday, of which 150,000 are from the UK.
There are also 300,000 Germans abroad with the operator.
If the Thomas Cook Group does collapse, package holidays are Atol protected. Meaning holidaymakers would not face any extra cost and there would be refunds for planned holidays that don’t happen.
But people who bought flights through the firm would not be protected although refunds could be secured through travel insurance.
The repatriation effort of Operation Matterhorn could take two weeks and cost around £600 million – which would be covered by the taxpayer.
John McDonnell, the shadow chancellor, told the Times: ‘It’s critical the government intervenes urgently to protect British holidaymakers, who through no fault of their own are facing this nightmare.’
Passengers from Antalya, Turkey, to Glasgow were among those catching what could be some of Thomas Cook’s last flights.
A fault with the plane prevented it from taking off, meaning they were stranded at the airport overnight.
They could be seen slumped on suitcases hoping they would be able to make it home before the end of the weekend.
Thomas Cook serves 19 million customers a year in 16 different countries.
It was set up by a cabinet maker and former Baptist preacher, Thomas Cook, and now runs more than 100 aircraft and 199 own-brand hotels.