Hundreds of thousands of holidaymakers were stranded by the collapse of the world’s oldest travel firm Thomas Cook, sparking the largest peacetime repatriation effort in British history. The liquidation marks the end of a British company that started in 1841 running local rail excursions and grew to pioneer the family package holiday across Europe, America, Africa and the Middle East.
The Current State of Affairs
Arranging hotels, resorts and airlines for 19 million people a year, Thomas Cook currently has around 600,000 people abroad and will need the help of governments and insurance firms to bring them home from places as far afield as Cancun, Cuba and Cyprus. Thomas Cook’s demise was after failing to secure a deal with creditors or a government bailout.
It sparked alarm at hotels where some customers had been asked to pay their bills again by out-of-pocket resort owners. Along with its 21,000 employees, the company’s fall hit global booking websites, credit card companies, travel firms using its airlines and British high streets where its travel agents were forced to shut. Turkey and Greece also warned their hoteliers would suffer.
What Went Wrong?
Thomas Cook has been brought low by a $2.1 billion debt pile, built up by a series of ill-fated deals, that hobbled its response to nimble online rivals. It had to sell three million holidays a year just to cover interest payments.
As it struggled to pitch itself to a new generation of tourists, the company was hit by the 2016 coup attempt in Turkey, one of its top destinations, and the 2018 Europe-wide heatwave which deterred customers from going abroad.
The company had agreed a 900 million pound rescue package with its banks and largest shareholder, China’s Fosun, but lenders asked for an additional 200 million pounds to keep it operating through the winter. In desperate meetings held recently, it failed to secure more funds, with the British government also refusing a bailout, judging it was not a good long-term bet.
It has been a very difficult situation for Thomas Cook and obviously thoughts are very much with the customers of Thomas Cook as well. A month back, Thomas Cook Chief Executive Peter Fankhauser in a statement apologized to their millions of customers, and thousands of employees, suppliers and partners who have supported them for many years.
It was very sad to see such a huge travel agency turn off its operations like this. Even at Manchester Airport in northwest England, all Thomas Cook branding was removed from check-in desks. Pictures posted on social media showed staff walking away from their final flights.
In the longer term, the collapse of Thomas Cook could hit the tourism sectors in the company’s biggest destinations, such as Spain, Greece, Turkey and the Canary Islands, where some hotels work exclusively with Thomas Cook. Bondholders, banks and shareholders also lost out, while aircraft leasing companies were reclaiming their planes.