Thomas Cook on brink, may leave 180,000 tourists stranded: report
21 Sep 2019
Iconic British tour operator Thomas Cook is facing a huge funding vacuum and urgently needs £200million in cash, without which the 178-year-old travel agency could collapse, leaving thousands of its customers stranded, say reports.
Shareholders of the company have been warned of ‘significant risk of no recovery’, especially since creditor banks also refused to offer further financial support to Thomas Cook.
Thomas Cook said it was hit with a demand for extra funds and a group of lenders led by Royal Bank of Scotland (RBS) has delayed a decision on funding. The company is now looking to stakeholders to bridge the funding gap.
The fund raising plan is expected to significantly dilute existing shareholders’ stakes in the firm, with ‘significant risk of no recovery’. It also means that the holiday plans of thousands of Brits could be in jeopardy and 180,000 customers may end up stranded abroad, say reports.
If Thomas Cook 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.
That means those already abroad will be able to continue with their holiday and an alternative flight home will be organised for them. Those with future bookings will be offered a full refund. Anyone who bought a flight-only deal through Thomas Cook is likely to have to contact their credit or debit card provider in a bid to get their money back.
That would leave the taxpayer with a bill of around £600million to get those people home.
People who bought just flights through the firm would not be protected.
Britain’s Department for Transport and Civil Aviation Authority have, meanwhile, set up an emergency plan to bring all those stranded customers home, which may, however, take up to two weeks, according to the Daily Mail.
Thomas Cook said in a statement: ‘Discussions to agree final terms on the recapitalisation and reorganisation of the company are continuing between the company and a range of stakeholders... These discussions include a recent request for a seasonal standby facility of £200 million, on top of the previously announced £900 million injection of new capital.”
But its lenders, which include about 10 banks led by taxpayer-saved Royal Bank of Scotland, demanded the travel company find an extra £200m.
If the company cannot secure the extra funding it risks going bust.
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.