Thomas Cook Group plc, a UK-based travel company, may be in more financial difficulty following reports that France-based credit insurance company, Euler Hermes, has withdrawn credit insurance cover for the company’s third-party suppliers.
While Euler Hermes maintains insurance cover to some of Thomas Cook suppliers, it has written to several suppliers to inform them of its intention to cease their indemnity. In a statement, Euler Hermes has cleared its position by saying, ‘(it) continues to write significant levels of cover for Thomas Cook and other major operators within the travel industry.
It is never in a credit insurer’s interests to see a company fail, and we closely monitor the performance of all companies to help us protect our policyholders within the supply chain.
It is not unusual for levels of cover to be reviewed, upward as well as downward, as our assessment of risk evolves. We enjoy a healthy and constructive dialogue with Thomas Cook’s senior management and advisers and continue to review all information about its current and future position.’
Thomas Cook, in a statement, has expressed its awareness of the Euler Hermes decision, and said, ‘This has zero impact on Thomas Cook customers. We confirm that no product has been removed from sale and no supplier has stopped trading with us.
We are a large group. This would affect only a very limited number of third-party travel providers to Thomas Cook in the UK.’
The company’s stock price has fallen following the Euler Hermes decision, and the beleaguered company is in talks for a two-year extension of its debt facilities, and an additional £1.2bn credit expansion.
The company statement reads, ‘Thomas Cook Group plc confirms that it is in advanced discussions with its banking group about extending its financing arrangements. In addition to the revised financing arrangements, the previously announced asset disposal programme and the sale of Thomas Cook India, the Group is exploring a possible sale and leaseback of certain aircraft.’