Fri | Nov 15, 2019

Tour operator Thomas Cook in race to avoid collapse

Published:Friday | September 20, 2019 | 10:35 AM
In this May 19, 2016 file photo, a Thomas Cook plane takes off in England. (Tim Goode/PA via AP, file)

LONDON (AP) — 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.

The debt-laden tour operator confirmed Friday it was seeking 200 million pounds in extra funding to avoid its collapse.

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 recapitalisation 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 Royal Bank of Scotland, one of Thomas Cook’s lenders, said the bank “has provided considerable support” to the tour operator over many years and “continues to work with all parties in order to try and find a resolution to the funding and liquidity shortfall.”

Any failure to raise the required capital would elicit questions about the jobs of the 22,000 staff Thomas Cook employs around the world, including 9,000 in Britain.

Shares in the company dived 19% on Friday.

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