Restructuring Specialist Hired by Civil Aviation Authority

The Civil Aviation Authority (CAA) hires a US restructuring company to highlight concerns about the financial strength of Thomas Cook following their emergency call for cash.

The US specialist company, A&M, is not however seen as experts in administration and liquidations in Europe. It is thought that its role with the CAA is aimed at protecting the regulator's interests if the holiday company’s problems get any worse.

The CAA is worried that Thomas Cook’s financial stability could lead to problems in; whether it has the ability to carry out its requirements under the Air Travel Organisers License agreement (ATOL) and also if there would be a need to revoke the company’s Air Operator's Certificate (AOC).

The ATOL license acts as a protection for travellers should the tour operator go bust in terms of repayment of money for holidays already booked and for repatriating stranded travelers.

What concerns the CAA is that the fund is already in arrears due to the collapse of operators such as Goldtrail and XL Airways. If Thomas Cook did collapse then the funds would be further stretched and could see Government intervention.

In regards to the AOC, the CAA has to ensure that Thomas Cook’s financial problems will not lead to a reduction in safety. CAA is also concerned that any breakup of the Travel Company will not lessen its ability to meet CAA obligations.

A&M are shadowing Ernst & Young role which they carry out for the banking syndicate. A&M will review whether Thomas Cook could give creditors some security over assets or businesses which would disadvantage the CAA.

The CAA said that they wouldn’t comment on an ATOL holders financial position. They also said that any one who has booked an ATOL protected holiday will have the backing of the CAA.

Thomas Cook’s shares crashed last month by 75 per cent in a single day when the tour operator said that it was very close to breaching bank covenants. However Thomas Cook were given a lifeline by its creditors when they received £200m credit facility.

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