Rescue talks fail
Thomas Cook collapses: holidays ruined, 22,000 jobs at risk
No deals: A branch in the Gyle, Edinburgh, which closed today
Thousands of holidaymakers had their plans ruined and more than 22,000 jobs lost as tour operator Thomas Cook collapsed in the early hours of the morning.
Negotiations with Chinese conglomerate, Fosun failed to raise £200 million needed to save the 178-year-old firm and the UK Civil Aviation Authority (CAA) said it has “ceased trading with immediate effect”.
A rescue plan that would have seen £900m in new money pumped into the travel firm fell apart at the last moment, when lenders demanded that Thomas Cook find an extra £200m to get through the winter.
Those talks collapsed and at about 2am the company entered compulsory liquidation putting 22,000 jobs at risk worldwide, including 9,000 in the UK, many of them at 500 shops and call centres.
The firm’s failure will see the biggest ever peacetime repatriation, aimed at bringing about 150,000 British holidaymakers home. Dozens of planes have been chartered by the government to fly customers home free of charge.
Passengers who have booked are advised not to turn up at the airport. Customers on a package holiday have Atol protection – a fund paid for through industry levies – which will cover the cost of their holiday and repatriation.
A statement on the Thomas Cook website said: “Thomas Cook UK Plc and associated UK entities have entered Compulsory Liquidation and are now under the control of the Official Receiver.
“The UK business has ceased trading with immediate effect and all future flights and holidays are cancelled. A dedicated support service is being provided by The Civil Aviation Authority to assist customers currently overseas and those in the UK with future bookings.”
Peter Fankhauser, Thomas Cook’s chief executive, said the firm’s collapse was a “matter of profound regret” and he apologised to the firm’s “millions of customers, and thousands of employees”.
Business Secretary Andrea Leadsom said she will write to the Insolvency Service urging it to “fast-track” its investigation into the circumstances surrounding Thomas Cook going into liquidation.
Analysts say the company was caught out with an outdated business model and high fixed costs. Thomas Cook was slow to adapt to the changing market. While its rivals were creating premium products, including “experiences”, Thomas Cook continued selling low-margin commoditised holidays.
Russ Mould, investment director at AJ Bell, said, “Despite having 22 million customers, the business only made £250 million underlying earnings before interest and tax which equates to about £11 a customer. That’s barely anything given the amount of effort involved to run its business and market its holidays.
“A weak pound and concerns about the impact of Brexit on consumer finances and the economy have resulted in many consumers holding off from booking holidays, plus there has been a growing trend for staycations where people holiday in the UK.
“Removing Thomas Cook from the holiday equation will see increased demand for other holiday companies and sadly that could result in higher prices for consumers.
“In the short term the situation is likely to see a boost in earnings for TUI and Jet2-owner Dart Group, both of whom have seen their share prices jump by 6% to 7% on Thomas Cook’s demise. Quoted airlines have also benefited with EasyJet’s shares up 5.1% and Ryanair up 3.8%.”
TSSA General Secretary, Manuel Cortes, has said he is seeking urgent meetings with administrators and other parties to look at the possibility of saving Thomas Cook.
Mr Cortes said: “We are seeking urgent meetings with the Thomas Cook administrators and hope that the company can be sold as a going concern to new investors rather than being thrown on the scrap heap.
“Clearly there was genuine interest in this iconic brand from Fosun and had it not been for the reckless actions of the creditors in recent days Thomas Cook’s future would have been secured.
“We still hope that discussions between Fosun and other parties which may be willing to take on this iconic brand will now be able to take place and given every opportunity of succeeding.
“However, it must be pointed out that the Government have made it far more difficult for that to happen because the Thomas Cook name will have suffered as a result of their inaction.
“The Business Secretary, Andrea Leadsom, has said she wants an urgent inquiry into the collapse of the firm – but the scope of that must include the Government’s response, or lack of response.
“It is incredible that with 9000 jobs on the line she has refused to meet us.”