Thomas Cook rescue plan a bitter pill, admits company chief Peter Fankhauser

12 July 2019, 09:17 | Updated: 12 July 2019, 16:44

A planned rescue deal for Thomas Cook which would effectively see the firm taken over is "a bitter bill", the head of the struggling travel firm has told Sky News.

While the bailout was needed to put the world's oldest package holiday operator on a sound footing, company chief executive Peter Fankhauser regretted it would "disappoint" existing shareholders, who had been "very, very loyal".

As revealed by Sky News, the firm confirmed it was in advanced discussions with its largest shareholder, the Chinese owner of Club Med, over a £750m cash injection.

Fosun Tourism Group and the British travel firm's lenders are looking at proposals which would see the conglomerate take over the firm's tour business and secure a significant minority interest in its airline.

Stocks plunged more than 44% in early trading on Friday following news of the plans, which would significantly dilute the stock of existing shareholders.

Mr Fankhauser told Sky News' Ian King Live programme: "It is a pragmatic solution to secure the business into the future and put the business on a solid financial footing.

"It is in the interest of the employers, the customers and our suppliers.

"The bitter pill is we have to disappoint in this plan the existing shareholders, which were very, very loyal to us over the last years.

"That is a disappointment for me personally. None of us wanted to have this outcome, but it is a solution which is securing the future of the business."

A spokesman for Fosun said: "Fosun is a shareholder in Thomas Cook, because it is a British company operating in the global travel industry, in which we have extensive experience.

"We are committed investors, with a proven track record of turning around iconic brands including ClubMed and Wolverhampton Wanderers FC."

Mr Fankhauser told Sky News' Ian King Live programme: "It is a pragmatic solution to secure the business into the future and put the business on a solid financial footing.

"It is in the interest of the employers, the customers and our suppliers.

"The bitter pill is we have to disappoint in this plan the existing shareholders, which were very, very loyal to us over the last years.

"That is a disappointment for me personally. None of us wanted to have this outcome, but it is a solution which is securing the future of the business."

Thomas Cook has been wrestling with a decline in bookings and uncertainty surrounding Brexit, which it said contributed to the £1.5bn half-year loss it posted in May.

The company is slashing costs in the second half of its financial year in the face of tough trading and higher fuel expenses, including cutting 150 jobs at its head office in Peterborough.

In May, it also signalled possible further store closures, having already announced plans in March to shut 21 stores and axe 320 retail roles.

Alongside the recapitalisation talks announcement, the company has provided an update on current trading which showed tour bookings down 9% and airline bookings down 3%.