UK travel giant Thomas Cook set to collapse: reports

Agence France-Presse

Posted at Sep 23 2019 08:11 AM

A pedestrian walks past a Thomas Cook shop in central London, November 26, 2014. Suzanne Plunkett, Reuters/file

LONDON - Thomas Cook's 178-year existence was reported to be coming to an end on Monday after the British travel firm struggled to find private investment to keep it afloat, potentially affecting thousands of holidaymakers.

The operator has said it needs £200 million ($250 million) or else it will face administration, which could affect 600,000 holidaymakers and require Britain's largest peacetime repatriation.

A source close to the negotiations told AFP that the company had failed to find the cash 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, leaving it on the brink.

The firm's creditors held a marathon meeting on Sunday to try and work out a deal, followed by a meeting of the board of directors.

The group issued a last-ditch plea to creditors to reduce the £200 million funding demand or restructure the debt, according to Sky News.

But it appears to have fallen on deaf ears, with the Financial Times reporting late Sunday that the efforts were unlikely to succeed and the Guardian saying it would go into administration in the early hours of Monday morning, with flights already being pulled from booking websites.

The Transport Salaried Staffs Association, which represents workers at the company, called on the government to save the firm.

"The company must be rescued no matter what," said TSSA General Secretary, Manuel Cortes.

Shadow business secretary Rebecca Long Bailey called on the government to step in by "taking an equity stake to avoid this crisis".

Foreign minister Dominic Raab promised that the 150,000 British tourists affected would not end up stuck abroad.

"I can reassure people that in the worst-case scenario, the contingency planning is there for people to avoid being stranded," he told BBC's Andrew Marr Show.

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 on hiring planes.

The government at the time described it as Britain's "biggest-ever peacetime repatriation".


But holidaymakers were already reporting problems, with guests at a hotel in Tunisia owed money by Thomas Cook being asked for extra money before being allowed to leave, according to a tourist interviewed by AFP.

"After an hour they left the hotel and are currently at the airport," said a spokesman for the Tunisian interior ministry. 

The group's activities would cease immediately in the event of bankruptcy, forcing its travel agencies to close, grounding its planes and leaving the group's 22,000 global employees -- 9,000 of whom are in Britain -- out of a job. 

Chinese peer Fosun, which was already the biggest shareholder in Thomas Cook, agreed last month to inject £450 million into the business as part of an initial £900 million rescue package.

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

Cabinet maker Thomas Cook created the travel firm in 1841 to carry temperance supporters by train between British cities.

It soon began arranging foreign trips, being the first operator to take British travelers on escorted visits to Europe in 1855, to the United States in 1866 and on a round-the-world trips in 1872.

The company was also a pioneer in introducing "circular note" -- products that would later become traveler's checks. 

It now has annual sales of £9 billion, serving 19 million customers in 16 countries.

© Agence France-Presse