Thomas Cook, one of the oldest names in the British travel industry, is being circled by potential bidders as lenders to the company prepare for crunch talks over the state of its finances.
Sky News has learnt that Thomas Cook has been tentatively approached about a takeover of its tour operating unit, and the entire company, by several parties.
The approaches have come as it contends with shifting consumer behaviour, Brexit uncertainty and other factors hurting traditional industry players.
The precise status of talks between Thomas Cook and its suitors was unclear on Saturday, although insiders cautioned that any deal was likely to be months away.
One described the various talks as preliminary.
A takeover of Thomas Cook would end the independence of a company that marked its 175th anniversary in 2016.
One City source said the company’s announcement in February that it was initiating a strategic review of its airline division had “flushed out” interest in the whole company from several parties.
Fosun, the Chinese company with which Thomas Cook runs a joint venture in the world’s second-largest economy, is understood to be among those which have lodged a preliminary interest in buying its partner’s tour operating business.
EU rules which require airlines based in the bloc to be majority-owned by European investors mean Fosun’s Club Med holiday business would not be permitted to own Thomas Cook’s large, and profitable, carrier.
Analysts also cited EQT and KKR, the two private equity firms which own Kuoni Group and Travelopia respectively, as logical bidders for the London-listed travel company.
Some parties are said to be weighing formal approaches for the entire company, which boasts an annual turnover of more than £9bn.
Any deal would be substantial, given that City analysts value Thomas Cook’s airline – which has a fleet of more than 100 aircraft – at up to £3.2bn, and the scale of the company’s borrowings.
Thomas Cook has an enterprise value of about £1.8bn, with gross debt of about £1.4bn.
It has a market capitalisation of just over £375m, after seeing its shares slump by 80% during the last year.
Insiders said this weekend that Thomas Cook and its lenders were also braced for negotiations about the future of its capital structure in the event that the airline is sold.
Sky News has learnt that the company has brought in advisers from AlixPartners to work on its balance sheet and cost reduction plans, while its syndicate of more than a dozen lenders has hired FTI Consulting to advise on their financial exposure to Thomas Cook.
Crucially, Thomas Cook has come through the part of the year when its cash reserves are at their lowest, with cash now being accumulated ahead of the crucial summer season.
Last month, the company said it would close 21 high street shops and pare back its retail workforce as part of an attempt to exert a tighter grip on costs.
However, consumers’ accelerating shift to booking holidays on digital platforms means that a much larger proportion of its 566-strong chain is likely to disappear in the coming years.
Preparations for a restructuring underline the challenged state of both Thomas Cook and the broader travel industry.
Earlier this month, the company was forced to issue a stock exchange announcement disclosing that it had inadvertently been breaching its borrowing limits, and that it required shareholder approval to increase them.
The entire sector is being ravaged by a brutal price war, while industry executives say uncertainty about the timing and nature of Brexit is prompting consumers to delay booking overseas holidays.
In recent months, rival TUI has been forced to issue two profit warnings, with the grounding of Boeing’s 737 MAX fleet a factor in its financial downturn.
EasyJet has also warned of slow summer sales in the last few weeks.
Sources close to Thomas Cook’s airline sale process said there had been “a healthy level of interest” in the division, with Germany’s Lufthansa reported to be among those eyeing Condor, the part of the business which is based in the country.
Talks about the airline sale are complicated by the need to strike a deal for Thomas Cook’s holiday customers to travel on its planes.
Doubts about the sustainability of Thomas Cook’s borrowings have plagued the company’s share price for years.
In 2013, it underwent a £1.6bn capital restructuring under Harriet Green, its former chief executive, which involved a rights issue and share placing.
Some City analysts have forecast that Thomas Cook will need to raise hundreds of millions of pounds in fresh equity again.
Peter Fankhauser, its chief executive, has described last year’s performance as “disappointing” but outlined a plan to turn the business around which requires greater investment in its own hotel portfolio.
Thomas Cook has also removed a significant amount of capacity from both parts of the group as demand has softened.
Bank of America Merrill Lynch, Credit Suisse and Morgan Stanley are advising Thomas Cook on the strategic review of its airline business.
They are also understood to be fielding interest in a full takeover of the business, with the company expected to provide an update when it reports half-year results next month.
A Thomas Cook spokeswoman declined to comment this weekend.