Thomas Cook Group has announced in a press release that it has paused the strategic review of the group's airline units, which would have likely included the sale of the airlines, pending the finalisation of a new recapitalisation plan.
"Since commencing the review, the operating environment in the European travel market has become progressively more challenging. This has impacted the Group’s underlying financial position and its ability to execute a disposal of the Airline or the Tour Operator, either in whole or parts, in a way which returns satisfactory value to the Group and its stakeholders," the British travel group said.
Thomas Cook said it was in advanced discussions with its largest shareholder, China's Fosun Tourism Group, and crediting banks regarding a GBP750 million pound (USD942 million) capital injection. The firm said that such a recapitalisation would allow it to trade over the low winter season and "invest in the business for the future".
Upon the successful completion of the recapitalisation, Fosun would own "a significant controlling stake" in the tour operator unit and a "significant minority interest" in the airlines.
Currently, Fosun owns an 18% stake in Thomas Cook Group. The Chinese investor also owns Club Med.
Thomas Cook admitted that existing shareholders' stakes would be diluted unless they choose to also participate in the recapitalisation.
"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," CEO Peter Fankhauser said.
The transaction is subject to multiple conditions, including the approval of both Thomas Cook's and Fosun's shareholders and the appropriate regulators. The Chinese investor cannot hold a majority stake in the group's airlines due to EU control and ownership rules.
Air Transport World has reported, citing internal sources, that following the completion of the recapitalisation Thomas Cook could revert to the idea of selling stakes in its airlines to external investors.
Previously, Lufthansa (LH, Frankfurt International) expressed interest in Thomas Cook's German unit, Condor (DE, Frankfurt International), while fund Triton eyed Thomas Cook Airlines Scandinavia (Copenhagen Kastrup) and the Scandinavian tour operating business. Virgin Atlantic (VS, London Heathrow) and Indigo Partners were also reportedly interested in acquiring some of Thomas Cook's airline assets.
