Thomas Cook in last-ditch talks to avoid collapse

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Thomas Cook Thomas Cook in last-ditch talks to avoid collapse

Up to 150,000 UK holidaymakers affected with 9,000 British jobs at risk as firm looks for £200m in funds

Thomas Cook plane
Thomas Cook is looking for £200m in extra funds. Photograph: Tim Goode/PA

Thomas Cook is holding last-ditch talks with key players on Sunday morning in a bid to avert a collapse that will affect 150,000 UK holidaymakers abroad and put 9,000 British jobs at risk.

The travel company is at risk of falling into administration imminently unless it finds £200m in extra funds. The government and the UK aviation watchdog are preparing to launch a rescue plan codenamed Operation Matterhorn.

The foreign minister, Dominic Raab, said the government had contingency plans in place for passengers in case rescue talks failed, and sought to reassure holidaymakers that they will not end up stuck overseas. However, he downplayed the prospect of a government bailout for the firm.

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“We would wait to see and hope that [Thomas Cook] can continue but in any event, as you would expect, we’ve got the contingency planning in place to make sure that in any worst-case scenario we can support all those who might otherwise be stranded,” Raab told the BBC.

The last-ditch meeting was taking place at the central London offices of law firm Slaughter & May, where participants included Thomas Cook’s creditors and its biggest shareholder, Chinese conglomerate Fosun. It came as holidaymakers at a hotel in Tunisia reported being locked in by security guards as the hotel demanded extra money, fearing it would not be paid by Thomas Cook.

Thomas Cook continued to reassure worried customers on Saturday night that their flights continue to operate as normal and all their package holidays are protected under the Atol scheme, which guarantees holidaymakers’ bookings.

However, tourists at the Les Orangers beach resort in the town of Hammamet, near Tunis, said their hotel was refusing to let guests leave while demanding extra money.

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The history of Thomas Cook

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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.

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Ryan Farmer, from Leicestershire, told BBC Radio Five’s Stephen Nolan show the hotel had on Saturday afternoon summoned all guests who were due to leave to go to reception “to pay additional fees, obviously because of the situation with Thomas Cook”.

With many tourists refusing pay on the grounds they had already paid Thomas Cook, security guards were keeping the hotel’s gates shut, refusing to allow guests out, or to let new visitors enter.

“We can’t leave the hotel. I’d describe it as exactly the same as being held hostage,” Mr Farmer said.

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The Transport Salaried Staffs Association (TSSA), which represents workers at the company, said the British government should be ready to assist with “real financial support”.

General secretary Manuel Cortes called for an urgent meeting with the business secretary, Andrea Leadsom. However, a government financial rescue is thought highly unlikely.

Cortes said in a letter: “It is incumbent upon the government to act if required and save this iconic cornerstone of the British high street and the thousands of jobs that go with it.”

The shadow business secretary, Rebecca Long Bailey, said: “This is yet more evidence of this government’s indifference to British jobs and businesses going under. All viable options must be explored by Thomas Cook and the government must consider stepping in and taking an equity stake to avoid this crisis.”

It is understood that Thomas Cook has approached the British government in an attempt to plug a gap in its funding.

A government spokesman said: “We recognise it’s a worrying time for holidaymakers and employees.

“The financial circumstances of individual businesses are a commercial matter, but the government and the Civil Aviation Authority are monitoring the situation closely.”

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