UK travel giant Thomas Cook faces collapse

UK travel giant Thomas Cook faces collapse

London (AFP) – Thomas Cook’s 178-year existence was hanging by a thread on Sunday after the iconic British travel firm struggled to find further private investment and is now relying on an unlikely government bailout.

The operator said Friday that it needed £200 million ($250 million) — in addition to the £900-million rescue deal secured last month — or else face administration, which could leave thousands of holidaymakers stranded and require Britain’s largest repatriation since World War II.

A source close to the negotiations told AFP on Saturday that the company had failed to find the £200 million from private investors and would collapse unless the government intervened.

But ministers are unlikely to step in due to worries about the pioneering operator’s longer-term viability, the Times reported on Saturday, leaving it on the brink of collapse and stranding up to 150,000 British holidaymakers abroad.

“We will know by tomorrow (Sunday) if agreement is reached,” the source told AFP. 

Conservative Party minister Brandon Lewis told Sky News on Sunday that it would be “inappropritate” for him to comment on the negotiations, but said that he hoped “they come to a positive conclusion”.

The firm’s shareholders and creditors were to meet from 9 am (0800 GMT) on Sunday, with a meeting of the board of directors due to be held 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”.

– Jobs threatened –

Thousands of workers could also lose their jobs, with the 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 percent stake in Thomas Cook’s tour operating division and 25 percent of its airline 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.

Cabinet maker Thomas Cook created the travel firm in 1841 to carry temperance supporters by train between British cities.

It soon began arranging foreign trips, being the first operator to take British travellers on escorted visits to Europe in 1855, to the United States in 1866 and on a round-the-world trips in 1872.

The company was also a pioneer in introducing “circular note” — products that would later become traveller’s cheques.

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