Thomas Cook’s bankruptcy sparked the largest peacetime repatriation effort in British history.
- Established in 1841, one of Britain’s oldest companies
- The world’s oldest travel firm
- Pioneer of package holidays and mass tourism
British travel giant Thomas Cook collapsed after failing to secure rescue funding.
The 178-year-old package holiday operator had spent Sunday frantically trying to raise a gigantic contingency fund of 200 million pounds (US$250 million) demanded by its lending banks, but to no avail.
“All Thomas Cook bookings, including flights and holidays, have now been cancelled,” said the CAA in a statement, following an earlier announcement that the travel firm has “ceased trading with immediate effect.”
The British government launched a repatriation programme aimed at bringing the company’s 150,000 British customers home from around the globe.
The liquidation 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 and mass tourism.
The firm ran 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.
The UK’s Civil Aviation Authority (CAA) said Thomas Cook had ceased trading and the regulator and government had a fleet of planes ready to start bringing home the more than 150,000 British customers over the next two weeks.
All the company’s flights are cancelled.
The British regulator is also contacting hotels hosting Thomas Cook customers to tell them that they will be paid by the government, through an insurance scheme.
“Our contingency planning has helped acquire planes from across the world – some from as far away as Malaysia – and we have put hundreds of people in call centres and at airports,” Transport Minister Grant Shapps said.
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 tourism sectors in the company’s 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.
Thomas Cook has been brought low by a 1.7 billion-pound (US$2.1 billion) debt pile, online competition, 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 group had seemed set for a rescue when it agreed to 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 finalising 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.
Fosun said it was disappointed by the company’s failure to strike a deal with its banks and bondholders and noted it had remained supportive throughout.
The recapitalisation plan was “no longer applicable given the compulsory liquidation” of Thomas Cook, Fosun said in a statement.
With headlines swirling that Thomas Cook was in trouble, suppliers started calling in their debts and future customers went elsewhere, draining the company of the cash it needed to keep operating.
“This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world,” Fankhauser said.