British tour operator, Thomas Cook, just a day after it was reported to be on the verge of bankruptcy and collapse, is now seeking bailout funds from the British Government to remain afloat.
Thomas Cook which is the British oldest travel agent (178-year- in operation) could go bust as it desperately looks to make up a £200 million shortfall. Also the airline if allowed to go down, could cost British taxpayers about £600million.
Again, a collapse would see 150,000 UK holidaymakers stranded overseas and throw the travel plans of many others into jeopardy. Frantic customers have been making queries to Thomas Cook to find out what is likely to happen to their trips. They have hours to get home or face getting stranded and facing a wait of weeks for a return flight.
The situation is so serious that the Department for Transport and the Civil Aviation Authority (CAA) has set up Operation Matterhorn, which would see the biggest ever peacetime repatriation.
The collapse of Thomas Cook will also render about 22,000 people jobless worldwide and about 9,000 in Britain. Also, the Brexit drama going on between British lawmakers and Boris Johnson, with October 31st exit date a few weeks away, this is one awaiting disaster the British Government would not want to see happen. But the task now is to get about £200million to add to the funds already provided by investors, to keep operations running, as the travel agent is already saddled with £1.6 billion of debt.
According to the report by Metro UK, Thomas Cook had struck a deal in July with its biggest shareholder, Chinese conglomerate Fosun, as well as its banks. They agreed to stump up £750 million to save the debt-laden firm from bankruptcy. This was topped up by £150 million from other key backers to see it through the winter. The banks, led by RBS and Lloyds, are now insisting the firm finds another £200 million to see it through the low season or they will pull the plug on the rescue deal, the report said.
The report added that the next 24 hours are now crucial to the firm’s survival and it has approached the government for help after giving up hopes of a private sector deal. The Times has said the government is unlikely to intervene amid concerns about the longer-term viability of the company.
The board of the troubled tour operator will meet tomorrow but a source close to the talks has said it was ‘more likely than not’ that it would enter administration. Another reason for the urgency is that Thomas Cook’s Air Travel Organiser’s Licence (Atol) is up for renewal at the start of next month. It is illegal to operate without it. The Department for Transport said: ‘We do not speculate on the financial situation of individual businesses.’
There are currently 600,000 Thomas Cook customers on holiday, of which 150,000 are from the UK. There are also 300,000 Germans abroad with the operator. If Thomas Cook does collapse, package holidays are Atol protected, meaning holidaymakers would not face any extra cost and there would be refunds for planned holidays that don’t happen. But people who bought flights through the firm would not be protected although refunds could be secured through travel insurance.
The repatriation effort of Operation Matterhorn could take two weeks and cost around £600 million – which would be covered by the taxpayer. John McDonnell, the shadow chancellor, told the Times: ‘It’s critical the government intervenes urgently to protect British holidaymakers, who through no fault of their own are facing this nightmare.’ Thomas Cook serves 19 million customers a year in 16 different countries. It was set up by a cabinet maker and former Baptist preacher, Thomas Cook, and now runs more than 100 aircraft and 199 own-brand hotels, the report stated.