Britain's oldest travelling firm Thomas Cook is in emergency talks to safeguard its future after it was given a last-minute demand to secure £200 million in extra contingency funding by its lenders, led by Royal Bank of Scotland and Lloyds.
The 178-year-old travel agent could face going bust if it does not manage to come up with the funds, which could urge the government to launch the biggest peacetime repatriation by the Civil Aviation Authority of over 150,000 British holidaymakers at a cost of £600 million.
It has been said the firm held contingency talks with ministers to prepare for the repatriation.
Thomas Cook announced today that talks to agree final terms on the recapitalisation and reorganisation of the firm with a range of stakeholders, including Club Med owner Fosun, are ongoing.
The statement adds: "These discussions include a recent request for a seasonal standby facility of £200 million, on top of the previously announced £900 million injection of new capital.
"The recapitalisation is expected to result in existing shareholders' interests being significantly diluted, with significant risk of no recovery."
Worried customers and family members of holidaymakers who fear being stranded abroad have contacted the touring operator on Twitter to find out what security Thomas Cook will offer.
Thomas Cook succeeded with a court application on Monday to delay a creditors' vote over the terms of a £900 million rescue funding injection until next week, however now the demand has raised this financing package to a total of £1.1 billion.
In a stock market filing, the company said meetings with creditors and stakeholders are scheduled for September 27 and 30.
When news of Thomas Cook's financial problems first arose earlier this year, MoneySavingExpert issued advice to travellers.
They said: "“Package holidays and city breaks which are booked directly through a travel firm, and include a flight, are covered by the Air Travel Organisers’ License (ATOL) scheme."
The firm formerly struggled with financial woes in 2011, when it had major debt problems and took out a £100 million pound loan just one week after paying the previous loan of the same amount off.