Hundreds of thousands stranded in Thomas Cook collapse

Thomas Cook was one of Britain's oldest and much-loved companies. Photo:Reuters
Thomas Cook was one of Britain's oldest and much-loved companies. Photo:Reuters
Thomas Cook, the world's oldest travel firm, collapsed on Monday, stranding hundreds of thousands of holidaymakers worldwide and sparking the largest peacetime repatriation effort in British history.

Chief executive Peter Fankhauser said it was a matter of profound regret that the company had gone out of business after it failed to secure a rescue package from its lenders.

The United Kingdom's Civil Aviation Authority said Thomas Cook had now ceased trading and the regulator and government would work together to bring the more than 150,000 British customers home over the next two weeks.

"I would like to apologise to our millions of customers, and thousands of employees, suppliers and partners who have supported us for many years," Fankhauser said in a statement released early on Monday.

"It is a matter of profound regret to me and the rest of the board that we were not successful."

The government and aviation regulator said that due to the scale of the situation some disruption was inevitable. "Thomas Cook has ceased trading so all Thomas Cook flights are now cancelled," the CAA said.

The demise of Thomas Cook marks the end of one of Britain's oldest companies that started life in 1841 running local rail excursions before it survived two world wars to pioneer package holidays first in Europe and then further afield.

The firm now runs hotels, resorts and airlines for 19 million people a year in 16 countries. It currently has 600,000 people abroad, forcing governments and insurance companies to coordinate a huge rescue operation.

Pictures posted on social media showed Thomas Cook planes being diverted away from the normal stands, and being deserted as soon as they had landed.

Crippled by its £1.7 billion ($NZ3.36 billion) of debt, Thomas Cook has been hit by online competition including Ryanair and easyJet, a changing travel market and geopolitical events that can upend its summer season.

Last year's European heatwave also hit the company hard as customers put off last-minute bookings.

The corporate collapse has the potential to spark chaotic scenes around the world, with holidaymakers stuck in hotels that have not been paid in locations as far afield as Goa, Gambia and Greece.

In the longer term it could also hit the economies of its biggest destinations, such as Spain and Turkey, leave fuel suppliers out of pocket and force the closure of its hundreds of travel agents across British high streets.

The British government and the aviation regulator have drawn up a plan to use other airlines to bring Britons home. In Germany, one of the biggest customer markets for Thomas Cook, insurance companies will take charge.

What happens now?

 

Who is affected?

The firm ran hotels, resorts and airlines for 19 million travellers a year in 16 countries, generating revenue in 2018 of 9.6 billion pounds ($12 billion). It currently has 600,000 people abroad, including more than 150,000 British citizens.

Thomas Cook employs 21,000 people and is the world's oldest travel company, founded in 1841. The company has 1.7 billion pounds ($2.1 billion) of debt.

What happens to tourists?

The British government has asked the UK Civil Aviation Authority to launch a repatriation programme over the next two weeks, from Monday to Oct. 6, to bring Thomas Cook customers back to the UK.

"Due to the significant scale of the situation, some disruption is inevitable, but the Civil Aviation Authority will endeavour to get people home as close as possible to their planned dates," it said.

A fleet of aircraft will be used to repatriate British citizens. In a small number of destinations, alternative commercial flights will be used.

The Civil Aviation Authority has launched a special website, thomascook.caa.co.uk, where affected customers can find details and information on repatriation flights.

For those customers not flying from Britain, alternative arrangements will have to be found. In Germany, a popular customer market for Thomas Cook, insurance companies will coordinate the response.

What is the advice to passengers? 

"Customers currently overseas should not travel to the airport until their flight back to the UK has been confirmed on the dedicated website," the Civil Aviation Authority said.

"Thomas Cook customers in the UK yet to travel should not go to the airport as all flights leaving the UK have been cancelled."

What did the CEO say?

"I would like to apologise to our millions of customers, and thousands of employees, suppliers and partners who have supported us for many years," Thomas Cook CEO Peter Fankhauser said.

"This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world."

The liquidation

Thomas Cook said it had entered compulsory liquidation and an order had been granted to appoint an official receiver to liquidate the company.

AlixPartners UK LLP or KPMG will be appointed as special managers for the different parts of the business.

Why did it collapse?

Hurt by high debt levels, online rivals and geopolitical uncertainty, Thomas Cook needed another 200 million pounds on top of a 900 million pound package it had already agreed, to see it through the winter months when it receives less cash and must pay hotels for summer services.

The request for an additional 200 million pounds torpedoed the rescue deal that had been months in the making.

Thomas Cook bosses met lenders and creditors in London on Sunday to try to thrash out a last-ditch deal to keep the company afloat. They failed.

Under the original terms of the plan, Fosun - whose Chinese parent owns all-inclusive holiday firm Club Med - would give 450 million pounds ($552 million) of new money in return for at least 75% of the tour operator business and 25% of its airline.

Thomas Cook's lending banks and bondholders were to stump up a further 450 million pounds and convert their existing debt to equity, giving them in total about 75% of the airline and up to 25% of the tour operator business. 

 

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