Virgin Atlantic has entered into the battle for struggling Thomas Cook’s airline operations by lodging a preliminary offer for the travel operator’s UK long-haul business, according to reports.
Sky News reports that the carrier part-owned by Sir Richard Branson’s Virgin Group submitted an initial proposal to bankers acting for Thomas Cook earlier this week.
Virgin Atlantic is reportedly looking to acquire Thomas Cook’s long-haul operations serving destinations such as Cancun in Mexico, Las Vegas and Orlando.
That part of the business, which accounts for roughly 20% of all seats sold by the UK-based travel company, operates out of London Gatwick, Manchester and – in summer months – Glasgow airports.
Virgin Atlantic joins Lufthansa and Indigo Partners, a private equity firm that owns Wizz and other low-cost carriers in the fight for Thomas Cook’s airline unit.
The news comes as Virgin Atlantic only a few months after Virgin Atlantic formed part of the consortium called Connect Airways – that includes Stobart Air which completed the takeover of cash-strapped regional carrier Flybe.
The fate of Thomas Cook’s airlines is intertwined with a series of parallel discussions relating to the future of its wider business, as it looks to finalise a £400 million extension to its borrowing facilities.
In February, the Thomas Cook Group said it could put its airline business unit up for sale in a bid to raise more than £1 billion to pay down debt.
The company started a “strategic” review of the airline to “increase financial flexibility and accelerate execution of our core strategy”. It could sell all, or just part, of the airline arm.
The troubled travel agent saw its operating loss increase by £14 million year-on-year to hit £60 million for the three months to the end of December as holiday bookings dropped.
While Thomas Cook as a whole may be struggling, the airline itself is seen as profitable. It made earnings before financing costs and tax of £129 million last year, up 37 per cent on 2017 although it reported a loss in the last three months of 2018.
The group’s airline division operates 103 aircraft, of which a quarter serve long-haul destinations, and carried more than 20 million passengers in 2018.
City analysts reportedly speculate that the Thomas Cook Group present finances are unsustainable. Last year it made profits of just £12 million on sales of £9 billion.
Thomas Cook’s airline assets include Thomas Cook Airlines UK, Thomas Cook Airlines Balearics, Thomas Cook Airlines Scandinavia and Condor.