Unable to adapt to the move online as smaller, nimbler travel
companies thrive, Thomas Cook, the household name in international
travel, is close to financial collapse. And the collapse could leave up
to 150,000 British tourists stranded overseas.
The iconic British
travel giant Thomas Cook say they’ve failed to find any further private
investment to stave off collapse and now relies on an unlikely
government bailout. The group is blaming “Brexit uncertainty” as the
major problem with their current malaise.
The operator announced
they needed £200 million (US$250 million) – in addition to the
£900-million rescue deal secured last month – or else face
administration, which could potentially trigger Britain’s largest
repatriation since World War II – customers who are currently overseas.
A source close to the negotiations told AFP the company had failed to
find the £200 million from private investors and would collapse unless
the government intervened. Without another bailout by its Chinese major
shareholder Fosun, the brand’s financial options are few.
But
ministers are unlikely to step in due to worries about the pioneering
operator’s longer-term viability leaving it teetering on the brink of
collapse and stranding up to 150,000 British holidaymakers abroad.
“We
will know by tomorrow if agreement is reached,” the source told AFP.
The firm’s shareholders and creditors are scheduled to meet from 9 am
(0800 GMT) on Sunday morning, followed by a meeting of the board of
directors in the afternoon.
The Transport Salaried Staffs Association, which represents workers at the company, called on the government to rescue the firm.
“It is incumbent upon the government to act if required and save this
iconic cornerstone of the British high street and the thousands of jobs
that go with it,” said TSSA General Secretary, Manuel Cortes.
“The company must be rescued no matter what.”
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”.
Thousands
of workers could also lose their jobs, with the 178 year old company
employing about 22,000 staff worldwide, including 9,000 in Britain.
Chinese
peer Fosun, which was already the biggest shareholder in Thomas Cook,
agreed last month to inject £450 million into the business. In return,
the Hong Kong-listed conglomerate acquired a 75% stake in Thomas Cook’s
tour operating division and 25% of its airline unit.
Creditors and
banks agreed to inject another £450 million under the recapitalisation
plan announced in August, converting their debt in exchange for a 75%
stake in the airline and 25 percent of the tour operating 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.
Source - The Thaiger / AFP
