LONDON (Reuters) – The chiefs of British Thomas Cook ( TCG.L ) met with lenders and creditors on Sunday to decide whether the world's oldest travel company will survive until Monday or a chaotic one Collapse could be felt around the world.
FILE PHOTO: The Thomas Cook logo can be seen in this picture. January 22, 2018. REUTERS / Thomas White / Illustration / File Photo
Thomas Cook operates hotels and resorts, airlines and cruises and has 600,000 customers on vacation. This means that governments and insurance companies may be forced to intervene and bring them home when the company enters the administration.
The management team, led by Peter Fankhauser, met with banks and bondholders in a London law firm on Sunday morning before an early-morning board meeting to see if the meeting could continue.
Founded in 1841, the company struggled to survive after its lenders threatened to sign a rescue contract that has been running for months.
Suffering from high levels of debt, online competition and geopolitical uncertainty, Thomas Cook has to raise another 200 million pounds ($ 250 million) on an already agreed £ 900 million package to survive the winter months must pay hotels for their summer services.
A person familiar with the situation told Reuters that the company spent the weekend in talks with the government and a number of potential investors on bridging the funding gap. "We have not given up," said the person on Saturday and declined to be called because of the sensitivity of the situation.
If Thomas Cook failed, it would create the largest peace return effort in British history.
The government and aviation authorities have devised a plan to engage other airlines and bring Britons home if needed. In Germany, where around 300,000 are with the operator abroad, it is left to the insurance companies to bring them home.
The news has triggered alarm not only in the resorts and at the pool bars, where customers access updates via social media, but also among the suppliers and future customers of the company who are losing confidence in the company.
This relieves the company of the liquidity it needs to continue operating and increase pressure on one of the UK's oldest and most popular companies.
"Hello Annie, I understand that your father may have recently been worried about all the news about Thomas Cook and our business, but our operations continue to run normally," the company responded to a concerned customer.
British Foreign Minister Dominic Raab wanted to reassure holidaymakers that they would not get stuck abroad.
"We … hope that this will continue (Thomas Cook), but in any case, as we might expect, we have come up with contingency planning to make sure we can at worst support anyone else stranded "Raab told the BBC.
At the board meeting, the company will have to decide whether it has enough cash in the short term to meet its on-going needs, and whether it has a reasonable chance of settling its debt in six to twelve months, predicating a deal to secure ,
At the previous meeting, lenders need to decide whether to continue supporting a company with 19 million customers per year in 16 countries.
It is struggling with a $ 1.7 billion debt pile and may be kept off course by events such as a coup in Turkey, a heatwave in Europe and the aggressive summer prices of low-cost carriers such as Ryanair.
Reporting by Kate Holton; Additional reporting by William James and Thomas Escritt; Edited by Dale Hudson