Thomas Cook is today locked in last-ditch talks to raise the £200 million that could save it from collapse.
The travel agent is trying to negotiate a deal with investors including Chinese firm Fosun tp prevent it going into administration. In an update to the market, it said the fundraiser is expected to significantly dilute existing shareholders' stakes in the firm, with "significant risk of no recovery".
Were the company to go under, an estimated 180,000 people could be stranded abroad, while the firm employs 22,000 staff around the world, including 9,000 in the UK.
Thomas Cook said the £200 million needed would be a "seasonal standby facility", on top of £900 million it had already raised from Fosun and its lenders. The firm has suffered recently as a result of mounting debts, reporting a £1.2 billion net debt in its half-year results in May.
It has also been hit hard by an influx of online competitors which has resulted in oversupply, forcing tour operators to cut prices. One newspaper reported that the company could go out of business by Sunday and that the Department for Transport and the Civil Aviation Authority have put together a plan to get thousands of holidaymakers home.
A Department for Transport spokeswoman said: "We do not speculate on the financial situation of individual businesses."
George Charles of www.MoneySavingHeroes.co.uk, said: “Increased competition with online and budget travel agents, such as Jet2holidays, the uncertainty surrounding Brexit and warmer summer months have seen Thomas Cook fall into what could potentially be extinction. However, this is a much bigger problem than just the effect on the high street and the empty storefronts that will remain; 22,000 jobs are at risk, 9,000 of which are in the UK, and at a time where the economy is less than secure this could have a lasting impact in the years to come with this number of people out of work.
“The Government and ATOL have a huge bill facing them if Thomas Cook is to close as of next week. ATOL will have to find a way to bring Britons home from their holidays who are covered by them, however there are going to be thousands of British holidaymakers, if not more, abroad that don’t have ATOL protection and will be left stranded if they don’t fork out for a new flight home. When Monarch Airlines collapsed back in 2017, the government assisted in getting all stranded passengers home, whether covered by ATOL or not, so we’d like to think they’d do the same."
