Shares in Thomas Cook plummeted more than 20% after it issued a statement confirming it needed to find an extra £200m to plug a financial hole.
The troubled travel company has been bombarded with queries from concerned holidaymakers after Sky News revealed the firm was frantically seeking to raise additional cash to fill a gap in its finances.
It follows a demand by lenders to secure new standby funding on top of the £900m already raised in a proposed deal headed by its leading shareholder Fosun Tourism Group, the Chinese owner of Club Med.
Sky News learned that the 178-year-old travel agent has this week been holding emergency talks about a deal to offload its Nordic airline and tour operating units in a desperate bid to raise the additional funding.
Insiders said the company was examining "every possible option" as it tries to salvage a rescue deal with more than 20,000 jobs across the group at risk, including 9,000 in the UK.
On its official Thomas Cook Cares Twitter handle, the firm has been seeking to calm concerns raised by customers, insisting that all its holidays and flights were operating as normal.
It said it was working on plans to "provide financial stability" for the group.
In one post, the company said: "It's nothing to worry about, it's business as usual here and all our flights and flights are going ahead as planned."
If the company was to fail in the coming days, it would trigger an operation to fly home an estimated 180,000 Britons who are abroad on Thomas Cook holidays.
Several hundred thousand people from other European countries are also current customers of the group at scores of vacation destinations.
It would be the biggest-ever repatriation operation involving the customers of a British-based company, and in terms of UK citizens would be significantly larger than the 2017 collapse of Monarch Airlines.
The Civil Aviation Authority (CAA) and Department for Transport (DfT) are being kept in close touch with the talks about Thomas Cook's future, and are understood to have begun drawing up contingency plans including the leasing of aircraft required to bring home customers.
In an update to the market, Thomas Cook confirmed it was seeking £200m in extra funding and said it is in talks with stakeholders, including Fosun, to bridge the funding gap.
It said: "The recapitalisation is expected to result in existing shareholders' interests being significantly diluted, with significant risk of no recovery."
Brian Strutton, general secretary of pilots' union Balpa, said: "It is appalling that banks that owe their very existence to handouts from the British taxpayer show no allegiance to a great British company, Thomas Cook, when it needs help.
"This puts 9,000 good quality UK jobs needlessly at risk and puts an iconic British brand in jeopardy.
"The government has a say in this, owning one of the key banks and still with huge influence over the other. RBS and Lloyds should be told by the Prime Minister to support Thomas Cook.
"If Thomas Cook goes into administration it will cost the taxpayer as much to repatriate holidaymakers as it would cost to save Thomas Cook.
"The government sat on the sidelines wringing its hands when Monarch Airlines was let down by its financiers. This time government needs to get a grip and do its bit to save Thomas Cook."