Thomas Cook Germany in rescue talks with investors

BERLIN (Reuters) – Thomas Cook’s German tour business filed for insolvency on Wednesday in a move aimed at separating its brands and operations from its failed parent, and said it was in talks with potential new investors.

The German government said it was considering an application for a bridging loan from Thomas Cook Germany, a day after it said it would guarantee a 380 million euro ($418 million) bridging loan for the British group’s German airline, Condor.

Thomas Cook, the world’s oldest travel firm, collapsed earlier this week, sparking the largest peacetime repatriation effort in British history and a scramble for survival among many of its subsidiaries.

The German regional state of Hesse, which is also providing help to Condor, said on Wednesday it would examine a request for financial assistance from Thomas Cook GmbH, and would discuss the matter with the federal government.

Hesse’s Prime Minister Volker Bouffier said support would only be possible if it was certain that the company had good prospects.

Torsten Kirstges, professor of tourism business at the Jade University of Applied Sciences, said it was unlikely the government would bail the company out as it was not as critical to the travel sector as Condor.

Condor and Thomas Cook GmbH, the second-biggest tour operator in Germany after TUI, are both independent units of the insolvent British parent company.

Condor is also expected to undertake insolvency proceedings under self-administration to avoid being entangled in the winding up of the parent company’s financial affairs.

CONDOR LOOKING FOR NEW OWNERS

Christoph Debus, head of Thomas Cook Airlines which includes Condor, said the German airline was selling tickets as normal and was hopeful it could compensate for the 20% of its business that comes from Thomas Cook holidays.

Condor is also looking for new investors, he said: “There are very concrete offers and partners we are speaking to and we are confident that we will find a good new ownership structure.”

Thomas Cook’s Nordic arm, meantime, has said it is looking for new owners, while Polish unit Neckermann Polska said on Wednesday it was insolvent. Its Dutch unit was granted protection from creditors on Wednesday.

Thomas Cook Germany said it had filed for insolvency in an attempt to restructure the business in an orderly fashion and continue profitable operations. It added that a German court could appoint a liquidator as soon as on Wednesday.

“Intensive talks over the last two days with strategic and private equity investors … have shown us that the German branches of former Thomas Cook with its brands Neckermann Reisen, Oeger Tours and Bucher Reisen have the chance to have a future,” the unit said in a statement.

The business, which serves around three million customers a year, said it had been weighed down by the weakness of its British parent and the impact of Brexit on the German business.

But Stefanie Berk, the unit’s head, said she was optimistic the business would survive.

“We owe this to our long-standing customers, committed employees and other partners who have supported us so much over the years and in the last difficult weeks,” Berk said.

The company said it was in contact with the German foreign ministry, insurers and other partners to get customers home. Zurich Insurance, which provided insolvency cover to Thomas Cook Germany, will cover the costs for those on holiday.

About 97,000 holidaymakers are still stranded on Thursday.

Trade union Verdi called for efforts to save the German business and its 2,000 employees, noting that thousands of travel agencies in the country depended on its survival.

Thomas Cook Austria, which belongs to the German unit, also filed for insolvency on Wednesday, with the aim of continuing in business.