Update: Thomas Cook has been put into liquidation as the £200m was not forthcoming
The troubled travel firm is in last minute negotiations with bondholders to approve a takeover by Chinese firm, Fosun Tourism. For the deal to be approved, 75% of bondholders must agree. In order for the bondholders to support the takeover, Thomas Cook may go into administration unless the additional money can be found.
In August, a £900m deal, to help the company avoid insolvency as it heads into the busy winter holiday season, was proposed.
‘’We announced on 28 August that we have reached substantial agreement with Fosun and our creditors regarding key commercial terms of the recapitalisation of Thomas Cook. We remain focused on completing the transaction. ‘’
The firm must convince their uncertain creditors, as well as the Civil Aviation Authority, who need to renew their ATOL license.
The UK CAA refused to directly comment, as did Thomas Cook themselves.
The potential collapse follows the profit problems the firm had experienced earlier this year.
In June, the 178-year old holiday firm were approached by their largest shareholder, Fosun, for a takeover. Fosun approached the company with the offer since there were fears over its financial strength following the three profit warnings they received in the past year and the difficulty they had in reducing their £1.4m debts.
Why the poor performance?
Many causes have been suggested; competition from online travel agents and low-cost airlines, the summers prolonged heatwave and Brexit uncertainty leaving customers to delay booking holidays, to name but a few. This time of year is also difficult as the bills for the holiday period are coming in but the money from advanced bookings isn't.
Should I be worried if I have a holiday booked with Thomas Cook?
No. Thomas Cook have ATOL protection which means UK travellers on air package holidays do not lose their money and are not left stranded abroad, in the unfortunate situation of the travel agent collapsing.
ATOL protection also covers charter flights, meaning that if the operator collapses whilst customers are away, they can continue with the rest of their holiday and fly home, at no additional cost. Similarly, if the business collapses before the holiday begins, the customer is entitled to a replacement holiday of the same value, if not a refund.
ATOL-protection, the scheme run by the CAA and backed by the UK Government, will be clearly marked on holiday documents.
Unfortunately, if flights are booked separately to accommodation or if flights are booked alone, ATOL does not cover customers.
We have already seen the likes of Monarch Airlines, WOW Air, Primera Air and Flybmi going bust...Will Thomas Cook manage to keep their bondholders and banks on side or will this be "au-revoir" to another well known travel-related company?
As an employee what happens to me if Thomas Cook goes into administration?
Watch our video below that explains your rights.
Categories: What is administration