The beleaguered travel firm Thomas Cook will on Monday request a delay to a key bondholders’ meeting on Wednesday to try to maximise the chances of securing a £1.1bn emergency rescue package to help stave off imminent financial collapse.
The company is involved in 11th-hour talks as it seeks to finalise the terms of the proposed restructuring agreement with the Chinese conglomerate Fosun, its lenders and bondholders.
“We gather they will be applying for a bit of breathing or wriggle room in order to try to get the deal through,” an industry source said.
Thomas Cook owes its name to a humble and deeply religious 32-year-old cabinet-maker who, one June morning in 1841, hiked the 15 miles from his home in Market Harborough to Leicester, to attend a temperance meeting.
The former Baptist preacher believed that the ills of Victorian society stemmed largely from alcohol and, presumably fatigued from his walk, realised he could deploy the power of Britain’s flourishing rail network to help spread the word.
Addressing the temperance meeting, he suggested that a train be hired to carry the movement’s supporters to the next meeting in Loughborough.
Thus, on 5 July 1841, some 500 passengers travelled by a special train for the 24-mile round trip, paying a shilling apiece.
Over the next few years, Cook laid on ever more trains, introducing thousands of Britons to train travel for the first time. The first such outing to be run for commercial purposes was a trip to Liverpool in 1845.
Over the next decade or so, the business expanded to offer overseas trips, to France, Switzerland, Italy and beyond, to the US, Egypt and India.
His more business-minded son John expanded the tour operator and its reach was such that the government enlisted its expertise in an effort, ultimately in vain, to relieve General Gordon at the siege of Khartoum in 1885.
John’s three sons inherited the business, which incorporated as Thos Cook & Son Ltd in 1924 and benefited from the increasing ease of international travel.
Its first flirtation with collapse came during the second world war, when the government requisitioned some of its assets and it was sold to Britain’s railway companies, effectively a nationalisation.
But it boomed in the postwar years as growing prosperity fuelled the appetite for holidays and it returned to private ownership in 1972.
Since then, it has changed hands and changed shape via a series of mergers and takeovers. It nearly collapsed in 2011 but averted its demise with a bailout deal funded by banks.
Now, after 178 years of operation, it is relying on its largest shareholder – the Chinese conglomerate Fosun – to survive.
Tough competition from online rivals, as well as one-off factors such as Brexit, have weighed on the company’s recovery after its near-collapse in 2011. It has also been hit by the high prices of jet fuel and hotels pushing up costs, while last summer’s heatwave convinced European customers to stay at home, hitting earnings.
In August the company published details of planned restructuring, including a £900m cash injection from Fosun International. The Club Med owner first invested in Thomas Cook, Britain’s oldest package holiday firm, in 2015 and is building some of its hotels in China as part of a joint venture.
The £900m cash injection, which Thomas Cook hopes will be completed in early October, is meant to help the company avoid bankruptcy as it heads into winter, when holiday bookings are at their lowest. Any deal would need support from three-quarters of its bondholders.
The 178-year old global travel group also needs to persuade the Civil Aviation Authority (CAA) – which administers the Air Travel Organiser’s Licence (Atol) scheme covering travel companies – that it should renew its licence at the end of September for another 12 months.
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 offers passengers financial protection in the event an airline goes under, ensuring they are able to get home.
Some 11 million customers will have travelled with Thomas Cook by the end of the commercially important summer season. With schools having gone back, it is estimated that there tens of thousands of Britons currently overseas on holidays they have purchased from the company.
A spokesperson for the CAA told the Guardian: “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.” Thomas Cook declined to comment.
