Thomas Cook ‘rejects £400m turnaround plan’

The group, which last year turned to its banks for a lifeline following dire trading, was approached by former Airtours executive Terry Fisher and Clive Jacobs, the founder of car rental business Holiday Autos.

Their initiative, which they said had the support of one of its largest shareholders Invesco, would have seen £400m injected into the business ahead of a larger rights issue, while they would have become co-chief executives, according to the Financial Times.

But the plan, which would have been partly funded with the veterans’ own money, was rejected by chairman Frank Meysman and is now understood to have been dropped altogether.

The group, which has 1,300 shops, recently said it was progressing with its turnaround plan for the UK business, which includes focusing on fewer and better quality hotels and a drive for more online bookings.

Thomas Cook has struggled in recent months as the poor economic climate in the UK has hit holiday bookings, leading to a series of profit warnings and the exit of its chief executive, Manny Fontenla-Novoa.

There have also been fears that the company, which has nearly £900m of debt, would breach its banking covenants.

The 170-year-old group reported pre-tax losses of £151.7m in the three months to December 31, compared with £99.3m the previous year, fuelling fears that its highly-publicised woes were deterring holidaymakers.

Its new chairman Mr Meysman plans to turn the company around, by selling £200m of assets over the next 18 months as part of plans to take a chunk out of its debt mountain.

The group also plans to sell its majority stake in Thomas Cook India and has received a number of informal expressions of interest, which include European businesses as well Indian companies and will shed six aircraft from its fleet this summer.

It has also taken on financial adviser John Short, who worked on a restructuring of MyTravel in 2004.

The approach from the industry veterans is understood to have taken place two weeks ago but was rejected because the proposals were not fully developed.