Financial rescue

Thomas Cook Group seals £900 million recapitalisation and heads for break-up

Long-serving Peter Fankhauser is CEO of the Thomas Cook Group.
Michael Krane
Long-serving Peter Fankhauser is CEO of the Thomas Cook Group.

Thomas Cook is set to be split into separate tour operator and airline businesses within weeks after the financially troubled group secured £900 million in recapitalisation funding from Chinese shareholder Fosun and its banks.

Europe’s second-largest tourism group yesterday announced “substantial agreement” with Fosun, its core lending banks and most of its financial noteholders over its planned recapitalisation and reorganisation, which could be implemented by early October.

Fosun (the group’s largest current shareholder with an 18% stake) will contribute £450 million of new money to the group and acquire at least 75% of the Group Tour Operator (subject to the receipt of anti-trust approvals) and 25% of the Group Airline.

In parallel, Thomas Cook’s core lending banks and noteholders plan to provide £450 million of funding and will convert their existing debt of £1.6 billion into approximately 75% of the Group Airline and up to 25% of the Group Tour Operator. This means Thomas Cook can be re-organised on a debt-free basis.

In future, Thomas Cook will consist of the tour operator businesses, including in Germany and the UK, its two biggest source markets, its hotel activities and other related businesses.

Thomas Cook Group CEO Peter Fankhauser already told fvw in an interview last month that he does not expect Fosun to make fundamental changes to the tour operating business. “I can rule out Thomas Cook getting a Chinese uniform look. Our experience proves this,” he said. “We have worked successfully with Fosun for four years and operate a joint venture in China with 320,000 customers. The Fosun management values the Thomas Cook brand.”

The hived-off Thomas Cook Airlines, comprising Condor and the airlines in the UK and Scandinavia, will become an independent company but is expected to continue cooperating closely with the tour operator business.

However, experts are already wondering how long banks and institutional investors will want to remain airline owners and whether they will revive the sale process for the airlines, which was started and then stopped earlier this year.

One scenario would be for the airline group to be split into its component parts, which would resolve the legal problems caused by Brexit. Thomas Cook Airlines UK could come under British ownership, thus ensuring future bilateral traffic rights. Condor and the other continental European airlines could be majority-owned by EU-based shareholders to retain their respective EU traffic rights.

 

Fankhauser and Debus at the fvw Kongress

Peter Fankhauser and airline chief Christoph Debus will both take to the stage at the fvw Kongress in Cologne on September 17 and 18. Fankhauser will discuss the latest developments in a special ‘CEO session’ while Debus will be one of the speakers at a session on leisure flights. You can find more information about the event under: www.fvw-kongress.de.  

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