Thomas Cook wants £250 million of taxpayers' support, writes Joel Hills
The uncertainty surrounding Thomas Cook’s future cannot persist.
The business continues to function as normal for now but just think about what sort of impact the headlines of the last few days have had on the bookings and cancellations.
The centre cannot hold and the expectation is that by Monday morning the company will need to offer clarity on what happens next.
Thomas Cook has asked the government to underwrite £250 million of extra borrowing in order to secure the company’s survival.
The request, which the government is reluctant to grant, was made last week in an effort to make it easier for Thomas Cook to raise the money it needs to avoid collapse.
Thomas Cook’s executives, its banks, its shareholders and its debt holders have spent the day trying to reach an agreement on a proposed £900m rescue deal.
Thomas Cook Chief Executive Dr Peter Fankhauser remains silent after the potential rescue meeting
The banks, among them RBS, Lloyds and Barclays, have said they will only support the restructuring if Thomas Cook finds another credit line of £200m - a credit line the banks are unwilling to provide.
Bondholders have said they won’t back any agreement to write off the money they are owed unless they are granted a stake in the Chinese conglomerate Fosun, which is set to take a controlling stake in Thomas Cook’s tour operating business as part of the restructuring.
What chaos. It’s little wonder that Thomas Cook is looking to the state for help but the government is hesitant about putting taxpayers' money on the line.
As one government source put it, Thomas Cook is seen as a "deeply troubled" travel agent that has "not been smartly run."
The business was described as "not economically important."
The case for bailing out the banking system in 2008 was compelling, the government doesn’t think the case is strong here.
Of course, if Thomas Cook goes into administration then there will be a cost to the taxpayer.
UK insolvency law doesn’t permit the orderly wind down of an airline so the company would cease trading immediately.
Thomas Cook’s fleet of aircraft, which would in theory be useful in any repatriation effort, will effectively be grounded.
The government has already asked the Civil Aviation Authority to make arrangements to hire aircraft from other airlines to bring 150,000 British holidaymakers home.
I’m told that the CAA expects the final bill to exceed £100m.
The Thomas Cook board is due to convene tonight but it’s not yet clear what the directors will be asked to discuss.
A revised agreement to save the business or a proposal to call in the administrators.