Thomas Cook, one of the world’s oldest and largest travel companies, is facing a race against time to stay afloat and ensure that around 150,000 British holidaymakers travelling abroad can get home.
If Thomas Cook goes under, Britain’s Civil Aviation Authority would likely be ordered to launch a major repatriation operation to fly stranded vacationer home.
The company says it is in talks with stakeholders such as leading Chinese shareholder Fosun to bridge a funding gap.
The money required would be a “seasonal stand-by facility” and come on top of the 900 million pounds of new capital already raised, Thomas Cook said in a statement Friday.
“The recapitalization is expected to result in existing shareholders’ interests being significantly diluted, with significant risk of no recovery,” it said. In May, Thomas Cook reported in half-year results that it had a net debt burden of 1.25 billion pounds. It said political uncertainty related to Britain’s departure from the European Union had led to softer demand for summer holidays. The company said higher fuel and hotel costs also were weighing on business. A spokesman for RBS, a lender to Thomas Cook, said it “has provided considerable support” to the tour operator over years and “continues to work with all parties to try and find a resolution to the funding and liquidity shortfall.”