Sunday, 22 September 2019

Frantic final five hours to save Thomas Cook - no government rescue on the cards

Senior executives and managers of the troubled travel firm are meeting this morning for a frantic final five hours to save the company from collapse.

The top bosses are meeting the 178-year-old travel company's biggest shareholders this morning at a special emergency meeting at the offices of international corporate and commercial law firm Slaughter & May Group in a final push to put together a rescue deal of £200 million demanded by banks RBS and Lloyds.  

Sky News in the UK is reporting that a plan to sell off the Nordic operations of Thomas Cook to Triton Partners was still under discussion, however other sources indicate that deal was pulled off the table on Friday.  In recent days a number of other options and permutations have been considered, including keeping Thomas Cook Airlines going whilst letting the tour operation and travel agency side of the business collapse. There has been much industry speculation of other airlines interested in taking on all or part of the airline division - including rumours that Lufthansa was about to rescue the German Condor part of the airline group, yet these remain purely conjecture at this time.

There are an estimated 600,000 Thomas Cook customers currently on holiday, of which around 160,000 are from the UK. The travel firm, founded in 1841 to operate temperance day trips, employs around 21,000 staff, with approximately 9,000 in the UK and is one of the largest travel companies in the World. It serves an average of 19 million customers each year in 16 different countries, with annual sales of £9 billion.

The crunch meeting comes as holidaymakers report being held hostage at a Tunisian hotel who demanded extra payment as Thomas Cook had not paid them yet - as per its contract.

Guests at the Les Orangers beach resort in Hammamet told BBC radio that the hotel was refusing to let them leave because of the ongoing concerns over Thomas Cook's future. They report that the hotel management is demanding they pay extra money. Security guards closed the hotel's gates as guests refused to pay the extra fees. 

If no rescue deal can be arranged in the final five hours, the firm is likely to go into administration today - a popular change over day in resorts as there will be fewer people overseas.  The UK's CAA has already been planning for a repatriation operation and some charter and wet-leasing airlines have already started moving aircraft from their home bases to be ready for the repatriation should the final talks fail.

There had been calls to the UK government to rescue the firm, however, Foreign Secretary Dominic Raab indicated strongly those calls were falling on deaf ears,  saying ministers did not "systematically step in" when businesses went under unless there was "a good strategic national interest".  He also said this morning that contingency planning was in place to make sure no-one would be stranded.

If the UK government follows the precedent set down after the collapse of Monarch and rescues all Thomas Cook customers, regardless of whether they booked an ATOL bonded package, it is likely to cost around £600 million, whereas funding the shortfall would cost just £200 million.

The firm continues to trade and operate as normal and has confirmed that all its holidays remain fully bonded with ATOL protection. 

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