Government to be forced to rescue 180,000 Britons if Thomas Cook collapses

The government could be forced to repatriate 180,000 UK customers of tour operator Thomas Cook as the firm teeters on the brink of collapse. 

The 178-year-old company confirmed it was seeking £200m in emergency funding and is in talks with stakeholders to avoid entering administration.

The British firm employs 22,000 staff internationally, including 9,000 in the UK, and serves around 19 million customers a year in 16 countries.

We’ll tell you what’s true. You can form your own view.

USD 0.27
a day, more exclusives, analysis and extras.

Were the company to go under, the Civil Aviation Authority (CAA) is expected to launch the largest repatriation effort since the Second World War, costing the taxpayer an estimated £600m.

Its lenders, which include several banks led by RBS and Lloyd’s, have reportedly demanded the £200m be secured before a meeting next Friday as part of a fund to see it through the winter.

It had been negotiating a £900m deal with the Chinese conglomerate Fosun, its largest shareholder, which has reportedly been delayed by the new demand from lenders.

If the firm fails to secure the winter contingency fund, it is likely to go bust.

“It is appalling that banks that owe their very existence to handouts from the British taxpayer show no allegiance to a great British company, Thomas Cook, when it needs help,” said Brian Strutton, general secretary of pilots’ union Balpa.

“This puts 9,000 good quality UK jobs needlessly at risk and puts an iconic British brand in jeopardy. The government has a say in this, owning one of the key banks and still with huge influence over the other. RBS and Lloyds should be told by the prime minister to support Thomas Cook.

“If Thomas Cook goes into administration it will cost the taxpayer as much to repatriate holidaymakers as it would to save it.

“The government sat on the sidelines wringing its hands when Monarch Airlines was let down by its financiers. This time, the government needs to get a grip and do its bit to save Thomas Cook.”

Shares in the company dropped by 20 per cent as trading opened on Friday in response to news of the firm’s scramble to find the necessary funds.

The tour operator is attempting to sell off parts of its business, including its Nordic airline and tour units to raise cash, Sky News reported.

The travel firm has suffered recently as a result of mounting debts, reporting a £1.2bn net debt in its half-year results in May. 

It has also been hit hard by an influx of online competitors, which has resulted in oversupply, forcing tour operators to cut prices.

When Monarch went bust in October 2017, about 85,000 travellers were flown back to the UK, mainly from Mediterranean airports, at a cost to the taxpayer of £40.5m – equating to £476 for every passenger.

The Department for Transport and CAA would not comment on the financial situation of individual businesses, but a CAA spokesperson said: “We are in regular contact with all large Atol holders and constantly monitor company performance.”

As with any Atol-protected company, no passengers who have booked holidays with Thomas Cook will be left stranded abroad or at a financial loss.

On Tuesday, the company filed for bankruptcy protection in the US, protecting it from lawsuits by US-based lenders while it reorganises it debt.

Mr Cook, a cabinet maker, organised his first tour in 1841, taking about 500 supporters of the temperance movement on a day trip by train from Leicester to Loughborough.

His first commercial venture was an outing to Liverpool in 1845, before expanding to overseas trips in 1855.

Source: Read Full Article