Thomas Cook Collapse, Over 600K Travelers Stranded
Travel operator Thomas Cook has collapsed after months of trying to seal bailout cash. The Thomas Cook collapse has left over 600,000 travelers stranded around the world. The company has failed to pay for their flights and hotel stays.
“We are sorry to announce that Thomas Cook has ceased trading with immediate effect,” the company said in a post on Twitter. The Civil Aviation Authority in Britain said that all Thomas Cook bookings, including flights and vacations, had been canceled. The collapse of the company has set in motion what was being described as the biggest peacetime repatriation in British history, as the government announced plans to bring back 150,000 Britons.
There’s plenty of reports of people stuck at airports. In Spain alone, 46 flights were cancelled on Monday. Even worse, some are being held hostage at hotels. Customers at a hotel in Tunisia say they were prevented from leaving the property on Saturday unless they paid extra fees to cover what was owed by the tour operator. Thomas Cook owes Tunisian hotels 60 million euros for stays in July and August, Tourism Minister Rene Trabelsi told Reuters on Monday, adding that 4,500 British Thomas Cook customers are still in the country.
The tour operator’s failure puts 22,000 jobs at risk worldwide, including 9,000 in the UK. One of the world’s best-known holiday brands, the business was founded in 1841 in Leicestershire by cabinet-maker Thomas Cook.
Government to the Rescue
Thomas Cook had made a request to the British government for around 150 million pounds. But, bailing it out would have set up “a moral hazard in the case of future such commercial difficulties that companies face”. But they are helping stranded customers.
The BBC reported that the government had chartered 45 jets to get people home. Airlines including easyJet, British Airways and Virgin were providing planes. Some are being flown in from as far away as Malaysia.
Thomas Cook Collapse
Thomas Cook had a debt of 1.7 billion pound (€1.9 billion). On top of that there was online competition, a changing travel market and geopolitical events. Last year’s European heatwave also hit the company hard as customers put off last-minute bookings.
The group had seemed set for a rescue. It agreed the key terms of a 900 million pound recapitalisation plan in a deal with its biggest shareholder, China’s Fosun, and the travel firm’s banks in August. But in finalizing the terms of the deal, the company was hit with a demand for another facility of 200 million pounds in underwritten funds by its banks. It was unable to secure that part of the deal.
