Payment firms are seeking to hold on to millions of pounds of customers’ money owed to Thomas Cook Group in a move which underlines the financial pressures afflicting the 178-year-old tour operator.
Sky News has learnt that a payment intermediary which works with Thomas Cook in the Nordic region – a significant part of the company’s operations – is in talks to extend the period for which it retains holidaymakers’ cash from two days to several weeks.
A number of other card acquirers are understood to have retained Deloitte, the accountancy firm, to advise them on their exposure to the business, which runs to hundreds of millions of pounds.
Credit card and payment firms typically seek to extend the period within which they retain customers’ cash if they have concerns about a company’s financial health.
In Thomas Cook’s case, the Nordic situation is likely to have an impact on its short-term cashflows.
The latest developments come after a grim week for Thomas Cook, which is Britain’s oldest and largest independent tour operator, with more than 20,000 staff and 21 million annual customers.
On Thursday, it reported a half-year loss of close to £1.5bn, the bulk of which stemmed from a £1.1bn goodwill writedown relating to its 2007 merger with MyTravel.
Shares in the travel group then slumped a further 40% on Friday when analysts at Citi ascribed zero value to its equity.
EY, Thomas Cook’s auditor, provided a going concern opinion on its accounts but warned that it faced “material uncertainty” without a deal to sell its airline business.
A new £300m winter debt facility – aimed at providing liquidity through the period when Thomas Cook’s cash generation is at its annual low-point – has been offered by lenders, but only on the basis that it demonstrates progress selling the airline.
The company insists that that extra headroom will protect it in “a worst-case scenario”.
A source close to the situation said this weekend that some card acquirers had been discussing whether they could retain as much as half the money paid by Thomas Cook customers for an unspecified time in order to protect their interests.
However, insiders said that it was only in the Nordic region that payment firms had the right to extend the retention period beyond two days.
In a statement on Saturday, a Thomas Cook spokesperson said: “In the last few days we have had a number of discussions with our suppliers to explain the ample resources we have to continue to do business as well as our strengthening liquidity position.
“We remain in discussions with our Nordic card supplier and we are confident that we will reach an acceptable solution in the coming days.”
Thomas Cook has become embroiled in an increasingly frantic bid to shore up confidence among consumers and lenders as it pointed to the absence of a Brexit deal’s impact on customers’ willingness to book overseas holidays during the crucial summer period.
Peter Fankhauser, chief executive, said the trading environment was “weak”, and that “continued competitive pressure resulting from consumer uncertainty is putting further pressure on margins”.
“This, combined with higher fuel and hotel costs, is creating further headwinds to our progress over the remainder of the year,” he added.
Shares in Thomas Cook now stand at just 11.8p, giving its equity a value of only £181m.
People involved in talks about the future of Thomas Cook have, nevertheless, sought to downplay what they regarded as “irresponsible” suggestions that the company is at risk of collapse.
“The business has access to plenty of liquidity at the moment.
“The hedge funds which hold short positions have a vested interest in seeing the shares collapse.”
Prospective bidders, including Virgin Atlantic Airways, Lufthansa and Indigo Partners, a prominent aviation investor, are among those to have submitted non-binding offers for parts of Thomas Cook’s airline business.
Talks about the airline sale are complicated by the need to strike a deal for Thomas Cook’s holiday customers to travel on its planes.
Sky News revealed last month that the strategic review of Thomas Cook’s airline had also triggered interest from prospective bidders for its tour operating business, as well as in the whole company.
Fosun, the Chinese owner of Club Med, has been steadily increasing its stake in Thomas Cook, which now stands at over 18%.
However, EU regulations would prohibit a Chinese owner of Thomas Cook’s airline.
The company is working with advisers from AlixPartners on its balance sheet and cost reduction plans, while its syndicate of more than a dozen lenders is being advised by FTI Consulting.
Last month, the company said it would close 21 high street shops and pare back its retail workforce as part of an attempt to exert a tighter grip on costs.
A much larger proportion of its 566-strong chain is likely to disappear in the coming years.
The entire sector is being ravaged by a brutal price war, while industry executives say uncertainty about the timing and nature of Brexit is prompting consumers to delay booking overseas holidays.
Thomas Cook has been in a similarly precarious position before.
In 2013, it underwent a £1.6bn capital restructuring under Harriet Green, its former chief executive, which involved a rights issue and share placing.