Peterborough's Thomas Cook in rescue talks with Chinese investor

Peterborough-based Thomas Cook has announced it is in rescue talks with its largest shareholder.

Friday, 12th July 2019, 9:17 am
Thomas Cook.
Thomas Cook.

The troubled travel operator says it is in 'advanced discussions' about a possible £750 million cash injection by Chinese investment firm Fosun.

If agreed, the new funding would help Thomas Cook to continue trading through the winter and allow it to invest in the future of the business.

But if the proposal is agreed it will mean a shake-up of the company's ownership with Fosun expected to take a controlling stake in the tour operating business and a significant minority interest in the group's airline.

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Thomas Cook chief executive Peter Fankhauser.

The move follows a torrid time for the 178-year-old Thomas Cook, which employs 1,000 people at its UK head office at Westpoint, in Lynch Wood.

A few months ago it shrugged off takeover talk by Fosun and just weeks ago announced it would axe 100 to 150 jobs at its Peterborough offices.

That followed hot on the heels of Thomas Cook's shock revelation that it has made a £1.5 billion loss over the half year.

Chief executive Peter Fankhauser said: “While this is not the outcome any of us wanted for our shareholders, this proposal is a pragmatic and responsible solution which provides the means to secure the future of the Thomas Cook business for our customers, our suppliers and our employees.

He added: "After evaluating a broad range of options to reduce our debt and to put our finances onto a more sustainable footing, the Board has decided to move forward with a plan to recapitalise the business, supported by a substantial injection of new money from our long-standing shareholder, Fosun, and our core lending banks.

The company has also warned it continues to face an 'uncertain consumer environment particularly in the UK'.

It warns that pre-tax profits for the second half of the year will lower than the same time last year.

It adds: "The Group is helping to mitigate these challenges with a rigorous focus on cost, while remaining fully focused on delivering a stronger holiday offering to customers through high quality, higher-margin hotels,underpinned by a digital focus and market-leading innovation.

The firm has blamed Brexit, unseasonably hot weather last summer and customers' preference for online bookings for many of its woes.