Thomas Cook, to many, is the epitome of UK package holidays – The go-to supplier of Holiday & Flight packages, but is the end near for the holiday giant?
Thomas Cook, a178-year-old global travel group, has recently began talks to seek a £1bn rescue deal, after warning it is at risk of insolvency. This comes after an already proposed £900m rescue request, which has subsequently been upped by £100m over “troubled times.” On top of this, the carrier is having to persuade the Civil Aviation Authority (CAA) – which administers the Air Travel Organiser’s Licence (ATOL) scheme which covers travel companies (Read more about ATOL here) – that it should renew its licence at the end of September for another 12 months, allowing it to continue selling package holidays.
“We gather they will be applying for a bit of breathing or wriggle room in order to try to get the deal through,” a representative stated following their announcement that they will delay their shareholder meeting till Wednesday – from it’s original plan of Monday – in order to try and bag more time to secure a deal. The carrier is said to be involved in The company is involved in “11th-hour talks” as it looks to finalise a plan with Chinese conglomerate, Fosun (The airline’s lenders and bondholders) regarding it’s restructuring.
But what’s gone wrong?
Thomas Cook is a reputable brand, having operated for many years – Infact, many Britons still cite TC as their go-to for package holidays. However, tough competition from rivals Jet2 and TUI, as well as current affairs such as Brexit, have weighed on the company’s recovery after it’s near-collapse in 2011. Coupled with this is the high prices of jet fuel and hotels pushing up costs, while last summer’s heatwave convinced European customers to stay at home, hitting the airline’s profits. In August of this year, details were published about a planned restructuring, including a £900m cash injection from Fosun International; An injection, now relied on by the carrier, hoping it will be completed in early October. With the company heads into winter, when holiday bookings are at their lowest, a deal is critical to avoid bankruptcy.
Summer marks the busiest period for package holiday providers, with an estimate of over 11 million customers having travelled with Thomas Cook during the busy commercial period of summer. As schools return for the academic year, many travellers have sought cheaper deals, travelling overseas with the carrier- It is estimated that tens of thousands of Britons are still currently overseas, on holidays they have purchased from TC. However, sources played down suggestions that the CAA is drawing up contingency plans to deal with the possibility of having to repatriate tens of thousands of passengers if they are stranded abroad. An ATOL protection means passengers are financially protected in the event an airline goes bust, ensuring they are able to get home safely with another carrier.
A CAA Spokesperson said in a press-release: “We are in regular contact with all large ATOL holders and constantly monitor company performance. We do not comment on the financial situation of the individual businesses we regulate.” – When asked for comment by Travel Radar Media, Thomas Cook declined.
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