Thomas Cook, World’s Oldest Travel Company, Collapses

Thomas Cook, World’s Oldest Travel Company, Collapses


LONDON — The tour operator and airline Thomas Cook said on Monday that it had collapsed, forcing hundreds of thousands of travelers to scramble to find a way home, after last-minute negotiations to obtain necessary financing for the debt-ridden company fell apart.

“We are sorry to announce that Thomas Cook has ceased trading with immediate effect,” the company said in a post on Twitter, and the Civil Aviation Authority in Britain said that all Thomas Cook bookings, including flights and vacations, had been canceled, affecting an estimated 600,000 people around the world.

The liquidation of the world’s oldest travel company, which specialized in low-cost package vacations that included flights and accommodation in more than 60 destinations around the world, 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.

The Civil Aviation Authority said that the first repatriation flight had left from Kennedy Airport in New York with more than 300 passengers on board and was expected to land at about 5 p.m. in London.

Thomas Cook was struggling with debts approaching £2 billion, forcing it to enter negotiations with shareholders and creditors that came at least £200 million short of what was needed to keep the company running. With no other choice, the company ceased operations.

Before the collapse, Prime Minister Boris Johnson said the government would not intervene to save the airline, adding that doing so would create a “moral hazard” because the possibility of a government bailout could encourage other companies to take risks.

Condor, an airline that is a subsidiary of Thomas Cook, said it was seeking financial help from the German government to keep its planes in the air after the collapse of the company, which impacted around 140,000 German travelers.

Condor said that it had been “profitable for many years” and that a loan from the German government would help it fly back those German travelers who were scheduled to fly with Condor anyway. Those Germans who flew with other Thomas Cook affiliates will also be covered by the insurance mandatory for operators of package tours.

The Civil Aviation Authority said it was working with the government to support passengers scheduled to fly back to Britain with Thomas Cook between Monday and Oct. 6, the agency said in a statement on its website, though the transport secretary, Grant Shapps, cautioned that what is known as “Operation Matterhorn” would not “be entirely smooth sailing.”

The BBC reported that the government had chartered 45 jets to get people home. Airlines including easyJet, British Airways and Virgin were providing planes, the BBC said, with some being flown in from as far away as Malaysia.

The aviation authority told passengers who were booked on Thomas Cook Airlines flights not to go to British airports, “as your flight will not be operating,” and warned that the repatriation effort would not include any outbound flights from Britain.

It also noted that it had contacted the hotels hosting Thomas Cook customers, who booked their accommodation as part of a package, to tell them that the cost of their stay will also be covered by the government. The announcement alleviated fears that travelers would be unable to leave their hotels until payment was settled.

On Saturday, some British tourists described being stopped from checking out of their hotel in Tunisia over concerns the hotel might not be paid.

The effects of the collapse will ripple out far from Britain, the headquarters of Thomas Cook. In Greece, where 50,000 vacationers are expected to be repatriated to their home countries in the coming days, there are fears about the effect of the company’s collapse on the local economy.

Michalis Vlatakis, the head of Crete’s union of tour operators, described the developments as a “7-magnitude earthquake,” adding that the local tourism sector was now “waiting for the tsunami.”

About 70 percent of tour operators on Crete have contracts with Thomas Cook, he said, adding that so far this year the British company brought 400,000 visitors to the island, and other islands that are even more reliant on tourism.

Layton Roche and Natalie Wells booked flights more than a year ago from Manchester to Kos, a Greek island, for their Friday wedding, and they said they had been forced to improvise after the collapse turned their plans into chaos.

“I have been awake for 28 hours now,” Mr. Roche, a 30-year-old civil engineer, said in a message on Monday, while he and Ms. Wells, 31, were on their way to Birmingham to find an alternative flight.

The couple had already paid about 4,000 pounds, or about $5,000, for alternative flights for themselves and some family members, and they were expecting to spend another £2,000 for their accommodation.

“I’m absolutely gutted,” Mr. Roche said, adding that around 80 percent of the guests would not be able to make it because of the extra costs.

Mr. Roche said he expected a wait of at least three months before being able to claim money through the Air Travel Organizer’s License, a program that protects most package vacations sold by travel businesses based in Britain.

The failure of Thomas Cook touched off a debate in Britain over whether the government should have intervened to prevent the collapse. Speaking to the British television network ITV, Mr. Shapps, the transport secretary, said that beyond the fact that “governments don’t usually go around investing in travel companies,” a bailout of Thomas Cook would most likely have only put off the inevitable by “stretching things out for a couple of weeks.”

“The company were asking for up to £250 million,” he said on “Good Morning Britain.” “They needed about £900 million on top of that, and they’ve got debts of £1.7 billion, so the idea of just spending taxpayers’ money on that just wasn’t really a goer.”

The company’s struggles have been building, and Thomas Cook warned that it had endured an especially difficult time in the six-month period ending in March.

Peter Fankhauser, the chief executive of Thomas Cook, cited a prolonged heat wave in the summer of 2018 that brought high prices in the Canary Islands, a popular destination for the tour operator.

But he also noted that, “there is now little doubt that the Brexit process has led many U.K. customers to delay their holiday plans for this summer.

The travel operator got its start in 1841, when a cabinet maker — and the man for whom the company is named — suggested a special route to carry temperance supporters from Leicester to a meeting in Loughborough, 12 miles away.

The company later expanded with trips to continental Europe and North America, and, according to its website, had sales of £7.8 billion and 19 million customers each year.

Visitors to the company’s website on Monday were greeted with a sparse gray screen with the company’s logo informing them of the collapse. “Thomas Cook UK Plc and associated UK entities have entered Compulsory Liquidation and are now under the control of the Official Receiver,” the website read, instructing customers to visit a special Civil Aviation Authority website that had been established.

Most British travelers on package vacations should be able to get home without suffering any financial loss. British law requires that those trips be insured under the Air Travel Organizer’s License, which is intended to reimburse travelers if their tour operator stops doing business. But those who only bought flights from Thomas Cook do not have the same protections and will be more reliant on personal travel insurance.

Andrea Leadsom, the business secretary, said in a statement that the government intended to convene a task force to support the thousands of Thomas Cook employees who will lose their jobs.

“This will be a hugely worrying time for employees of Thomas Cook, as well as their customers,” Ms. Leadsom said. “Government will do all it can to support them.”

The government also said that it would push to expedite an investigation into the circumstances around the company’s going into liquidation.

Two years ago, Monarch, another British carrier and tour operator, collapsed, leaving more than 100,000 passengers stranded abroad and forcing the government to step in to bring them home.



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