The last few days there has been a lot of news regarding Thomas Cook's financial position. Now, it seems as though Nordic credit card providers are looking to withhold payments due to the carrier.
The carrier was forced to reassure customers that it was not at risk of collapse as its share price fell. Indeed, on Monday the carrier's shares fell to just 10p. However, despite all these indications, Thomas Cook insists that customers have absolutely nothing to worry about due to strengthening liquidity.
Airline sale
The Thomas Cook group is currently attempting to sell its airline arm in an attempt to streamline its operations. The airline has received several serious bids from big airlines. These include Lufthansa and Virgin Atlantic. IAG was not interested in bidding. The Lufthansa group currently owns airlines including Lufthansa, Swiss, Austrian, and Eurowings. However, the Virgin Group is also no stranger to airline acquisitions. Earlier this year, as part of a new group, Virgin successfully bought out Flybe.
However, when airlines go unsold during financial troubles, the consequences can be fairly severe. Take WOW Air for example; following a failed bid from both Icelandair and the Indigo Group, the airline suspended flights and declared bankruptcy.
Credit card pressure
According to reports from CH-Aviation, some credit card issuers are reportedly attempting to withhold payments from the struggling carrier. One Nordic payment firm is talking to Thomas Cook regarding how long it holds the money before releasing it to the carrier. This could see them holding the money for several weeks.
Additionally, other credit card companies are also looking to hold up to 50% of payments due to Thomas Cook. However, those companies and timescales are currently unspecified. If Thomas Cook is in financial trouble, withholding payments could be the start of a slippery slope for the airline.
Indeed, we saw a similar effect when Jet Airways failed to make repayments on its loans. Jet Airways was unable to pay for its planes, which meant it was unable to fly and therefore unable to make money to pay for its planes.
Thomas Cook response
Simple Flying reached out to a Thomas Cook Spokesperson. They told us:
"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."
The airline maintains that it has a strong financial position. However, at the end of March, the airline posted a loss of £81 million.
What do you think the future has in store for Thomas Cook Airlines? Will a buyer be found? Let us know your thoughts in the comments!