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Thomas Cook-2

Old 16th Sep 2019, 23:31
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https://www.proactiveinvestors.co.uk...se-902789.html


It looks to be game over sadly ....MON MK 2
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Old 16th Sep 2019, 23:47
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the article seems to mention everything we already know. I find it difficult to agree with you
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Old 16th Sep 2019, 23:53
  #643 (permalink)  
 
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Originally Posted by louelle100 View Post
the article seems to mention everything we already know. I find it difficult to agree with you

Lets hope your right , However all this has a depressingly familiar feel to it......
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Old 17th Sep 2019, 00:20
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Thomas Cook Group is a much larger organisation than Monarch was. However, a big chunk of this is based in Scandinavia and Germay - about which the CAA and Dept of Transport will be less concerned. Thomas Cook Air UK has almost exactly the same number of aircraft as Monarch did - albeit 25% of these are widebodies. One might also include the handful of aircraft in Thomas Cook Balearics but the resulting airline size is still roughly similiar to Monarch
What is different is the size of the tour operator arm in the UK, but on 1st October kids abroad will be a rarity so rather less in the way of bad press compared to a collapse in early August

If TC management are close to a deal just before 1st October, I could see the CAA being prepared to give additional breathing space to the start of November (i.e. end of S19 and wait until the end of half term holidays) but beyond that I'm not sure the CAA would be able to turn a blind eye. That said, if TC fails to meet financial obligations (e.g. to banks who've lent money) and cashflow is negative in October, it would need just one aggrieved creditor to start the process of petitioning for bankruptcy / seeking a winding up order in the courts before the whole edifice starts to crumble.

That said, one should not underestimate the impact of credit default swaps and what will/won't trigger a default clause in these contracts. The fact that the survival of a company of 20,000 employees is beholden to what constitutes a default deservedly gives banks and hedge funds a bad name

Last edited by davidjohnson6; 17th Sep 2019 at 01:35.
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Old 17th Sep 2019, 06:28
  #645 (permalink)  
 
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A minority of bond holders are out to protect their position and are adopting poker face. Fosun and the lending banks have already agreed a recapitalisation and want to own their respective shares of the tour operators and airlines. They are trying to negotiate a deal that can be approved by consensus.

Meanwhile, Thomas Cook have an administrator on standby in the event that the minority bond holders derail any deal. This is because the nuclear option is a “pre pack” administration.

My view, a bumpy two weeks ahead but Fosun and the lending banks will be in control either way. The CAA will be aware of all of this.
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Old 17th Sep 2019, 08:23
  #646 (permalink)  
 
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According to the Guardian, two hedge funds have credit default swaps in place which are only triggered if their bonds are worthless. They have a vested interest in ensuring that that happens.
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Old 17th Sep 2019, 10:35
  #647 (permalink)  
 
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From Travelweekly.co.uk

Thomas Cook has filed for bankruptcy protection in the US courts to shield it from lawsuits by American creditors.

The travel group filed for a Chapter 15 court protection in the Southern District of New York on Monday, legal documents show.

Chapter 15 of US bankruptcy law protects foreign companies from lawsuits by US creditors while they reorganise their debt.
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Old 17th Sep 2019, 10:50
  #648 (permalink)  
 
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Originally Posted by 763 jock View Post
A minority of bond holders are out to protect their position and are adopting poker face. Fosun and the lending banks have already agreed a recapitalisation and want to own their respective shares of the tour operators and airlines. They are trying to negotiate a deal that can be approved by consensus.

Meanwhile, Thomas Cook have an administrator on standby in the event that the minority bond holders derail any deal. This is because the nuclear option is a “pre pack” administration.

My view, a bumpy two weeks ahead but Fosun and the lending banks will be in control either way. The CAA will be aware of all of this.
The problem is the airline cannot be in the control of administrators for any period of time. The CAA is obligated by law to suspend an AOC of an airline in administration. The pre-pack would have to see the airline transferred to other 'fit and proper' owners prior to the admiration proceedings. Of course this is separate from the issue with the ATOL license, which is not directly related to the AOC. It is possible for the travel arm to end up in administration, but the airline does not. However, if the travel arm is a real mess it could lead the airline into insolvency. Not saying it is going to or even likely to happen, but there are permutations where it could.
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Old 17th Sep 2019, 11:56
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Originally Posted by pholling View Post
The problem is the airline cannot be in the control of administrators for any period of time. The CAA is obligated by law to suspend an AOC of an airline in administration. The pre-pack would have to see the airline transferred to other 'fit and proper' owners prior to the admiration proceedings. Of course this is separate from the issue with the ATOL license, which is not directly related to the AOC. It is possible for the travel arm to end up in administration, but the airline does not. However, if the travel arm is a real mess it could lead the airline into insolvency. Not saying it is going to or even likely to happen, but there are permutations where it could.
This is absolutely correct. A pre-pack administration would have to also take into account which and what parts of the group have the biggest net liabilities, how those liabilities are then distributed, and more very complex financing and accounting regulations rules. It is by no means straight forward at all.

Take the recent House of Fraser example... Company was trading, Mike Ashley showed an interest, but didn't bid. Company went into administration, within hours Mike Ashley picks it up for his original interest price. As was said by pholling , Thomas Cook Group would effectively have to be insolvent first before a pre-pack could kick in, which would forfeit the AOC and ATOL licence.
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Old 17th Sep 2019, 12:18
  #650 (permalink)  
 
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Originally Posted by davidjohnson6 View Post
. The fact that the survival of a company of 20,000 employees is beholden to what constitutes a default deservedly gives banks and hedge funds a bad name
IMO too many listed company's are playing fast and loose with stake and share holders, not just TCG - some of the market reports from the CEO were thoroughly misleading prior to the announcing of the D4E swap, and the D4E/Fosun plan was again rather presumptive that the bond holders would agree, It's unreasonable to chastise debt holders for requiring repayment on loan commitments - they're not a charity.
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Old 17th Sep 2019, 13:29
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An extension of the ATOL license must surely be a priority for the CAA ahead of any rules and regulations concerning ownership of a license by an entity in administration. Fail to extend and the CAA has got the massive task of repatriating thousands of passengers themselves when the company could've done that themselves during October.
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Old 17th Sep 2019, 13:53
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Originally Posted by Smooth Airperator View Post
An extension of the ATOL license must surely be a priority for the CAA ahead of any rules and regulations concerning ownership of a license by an entity in administration. Fail to extend and the CAA has got the massive task of repatriating thousands of passengers themselves when the company could've done that themselves during October.
Legally the grant of an ATOL license and AOC are totally separate activities. The first is an insurance policy at its most basic allowing a travel company to sell protected package holidays. The second shows that an airline meets the legal requirements to operate. The CAA cannot set aside the suspension of an AOC if a company fails to meet the legal requirements to hold one. Note: ATOL license has no bearing on the AOC, but if the removal of the ATOL license results in the airline going insolvent and into administration the CAA must suspend the AOC. The ATOL license decision will hinge on whether the insurance risk is acceptable. October is probably a much better time to have to repatriate clients as compared to December, Easter, or Summer. Jan and Feb would be easier still.
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Old 17th Sep 2019, 14:03
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Originally Posted by pholling View Post
Legally the grant of an ATOL license and AOC are totally separate activities. The first is an insurance policy at its most basic allowing a travel company to sell protected package holidays. The second shows that an airline meets the legal requirements to operate. The CAA cannot set aside the suspension of an AOC if a company fails to meet the legal requirements to hold one. Note: ATOL license has no bearing on the AOC, but if the removal of the ATOL license results in the airline going insolvent and into administration the CAA must suspend the AOC. The ATOL license decision will hinge on whether the insurance risk is acceptable. October is probably a much better time to have to repatriate clients as compared to December, Easter, or Summer. Jan and Feb would be easier still.
Indeed, February would be the best month for company wind-ups in the travel industry, but it will boil down to cash-on-hand. The CAA has to be satisfied that the company has the cash reserves or ready access to contingency funds to get it through the whole of the licence period, not just a stop-gap temporary solution to allow it to limp on until Feb.

It's very much a binary choice for the CAA.... Do you have the dosh to keep going for the duration of your ATOL licence? Yes or No?
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Old 17th Sep 2019, 16:52
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There is no way TC are going to allowed to go under the Chinese investors will do what ever is needed , To much glooming and dooming methinks ...

Worst case scenario the government would step in .TC is a national treasure no way would Boris let it go under .

No one needs to worry .
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Old 17th Sep 2019, 16:53
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I was working for XL when they went under. I found it profoundly difficult to deal with.

Hope something can be sorted out.
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Old 17th Sep 2019, 17:04
  #656 (permalink)  
 
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Originally Posted by diffident View Post
Indeed, February would be the best month for company wind-ups in the travel industry, but it will boil down to cash-on-hand. The CAA has to be satisfied that the company has the cash reserves or ready access to contingency funds to get it through the whole of the licence period, not just a stop-gap temporary solution to allow it to limp on until Feb.

It's very much a binary choice for the CAA.... Do you have the dosh to keep going for the duration of your ATOL licence? Yes or No?
There are no cash reserves - TC need £150m just to see it through the winter season -
The re-financing rescue is not as yet, a done deal - TC needs £750m to get it's head above water -
The annual renewal of the ATOL bond payment of £100m is due soon -
That money is held as an assurance if the company becomes insolvent it is there to pay out the for repatriation flights, and settle claims of the affected holidaymakers/passengers either abroad or have booked holidays in advance -
No ATOL bond, then no licence will be given by the CAA to sell package holidays and fly planes (nothing to do with the AOC)
No licence - then the airline and it's travel business has to be suspended and likely wound up.

It's a brutal business and TC in hindsight should not have bought/merged with the Airtours/My Travel Group
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Old 17th Sep 2019, 17:10
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Originally Posted by Doc Q View Post
There is no way TC are going to allowed to go under the Chinese investors will do what ever is needed , To much glooming and dooming methinks ...

Worst case scenario the government would step in .TC is a national treasure no way would Boris let it go under .

No one needs to worry .
You have picked up on a point there about TC being a 'national treasure'.
Thomas Cook WAS nationalised in 1948 and brought into government ownership along with the British Railways Board/BTC.

Of course we hope that TC will survive this but the enormity of it is x10 that of Monarch.
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Old 17th Sep 2019, 17:22
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Let’s not forget that Thomas cook is an international group of companies. It has 5 AOCs only one of which is administered by the CAA.
Could it withstand the grounding of its UK airline while a pre-pack took place? Probably.
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Old 17th Sep 2019, 17:25
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Originally Posted by rog747 View Post
There are no cash reserves - TC need £150m just to see it through the winter season -
The re-financing rescue is not as yet, a done deal - TC needs £750m to get it's head above water -
The annual renewal of the ATOL bond payment of £100m is due soon -
That money is held as an assurance if the company becomes insolvent it is there to pay out the for repatriation flights, and settle claims of the affected holidaymakers/passengers either abroad or have booked holidays in advance -
No ATOL bond, then no licence will be given by the CAA to sell package holidays and fly planes (nothing to do with the AOC)
No licence - then the airline and it's travel business has to be suspended and likely wound up.

It's a brutal business and TC in hindsight should not have bought/merged with the Airtours/My Travel Group
ATOL has nothing directly to do with the operation of the airline. It has everything to do with cash flow. With Monarch once the license was revoked they had no revenue so the company and the airline couldn’t pay their bills. If TCX have/had sufficient outside revenue or capital they could potentially remain solvent and continue flying, including provide repatriation of holiday makers stranded by the collapse of the holiday arm. Keep in mind TCX have a larger percentage of non package holiday bookings when compared to Monarch, what that number is and whether it is enough I have no clue.
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Old 17th Sep 2019, 17:29
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Originally Posted by Jonty View Post
Let’s not forget that Thomas cook is an international group of companies. It has 5 AOCs only one of which is administered by the CAA.
Could it withstand the grounding of its UK airline while a pre-pack took place? Probably.
To some extent that would depend on the rules in each of the other jurisdictions regarding AOCs and insolvency. However, if the AOC of the UK airline is suspended they will have to immediately sell their slots or lose them. This means they could not easily return to the same operations in the UK once they regained their AOC. Further, last minute transfers of ownership to other airlines in the group would probably be “frowned upon”.
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