Thomas Cook has collapsed - leaving 150,000 stranded abroad and 21,000 without jobs
by David Parsley
Thomas Cook has collapsed leaving 150,000 of its customers currently abroad relying on the UK’s biggest ever peacetime operation to get them home and its 21,000 staff with no job this morning (Mon 23 Sep).
The collapse was announced at 2am this morning after talks failed to achieve a deal to keep it alive.
The Civil Aviation Authority (CAA) said Thomas Cook’s four airlines will be grounded, its 600 UK travel stores would shut, and its 21,000 employees in 16 countries, including 9,000 in the UK, will lose their jobs.
On Friday, the 178 year old company said its banks - which include state-owned Royal Bank of Scotland and Lloyds Banking Group - had demanded £200m in emergency funds to avoid going bust. The group began last ditch talks at City law firm Latham & Watkins to save the company with shareholders and creditors to stave off failure on Saturday.
All night talks fail to find a solution
However, despite putting several proposals to its banks and requesting a bailout from the government, the UK’s oldest travel firm shut its doors with a short statement.
It said, “We are sorry to announce that Thomas Cook has ceased trading with immediate effect.”
Peter Fankhauser, Thomas Cook's chief executive, added the firm's collapse was a "matter of profound regret".
Commenting as the company entered compulsory liquidation, Mr Fankhauser also apologised to the firm's "millions of customers, and thousands of employees".
Transport secretary Grant Shapps announced the Government and CAA has hired dozens of charter planes to fly customers home free of charge. The operation has been estimated to cost around £600m.
In a statement, the Department for Transport (DfT) said all customers currently abroad with Thomas Cook who are booked to return to the UK over the next two weeks will be brought home as close as possible to their booked return date.
'The task is enormous'
Thomas Cook package holiday customers will also see the cost of their accommodation covered by the Government, through the Air Travel Trust Fund or Atol scheme, the DfT said.
Thomas Cook met with shareholder, creditors and government advisors yesterday in an attempt to avoid collapse (Photo: Reuters)
Shapps said, “Thomas Cook’s collapse is very sad news for staff and holidaymakers. The Government and UK CAA is working round the clock to help people.
“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.
“But the task is enormous, the biggest peacetime repatriation in UK history. So there are bound to be problems and delays. Please try to be understanding with the staff who are trying to assist in what is likely to be a very difficult time for them as well.”
Last Thomas Cook flight lands in Manchester
Customers already abroad and hundreds of thousands more with bookings were left with no one at the company to seek help from and have been directed to the CAA for assistance. All passengers with flights today were told not to travel to the airport. The last Thomas Cook flight landed at Manchester airport just after 5am.
The company had blamed a slowdown in bookings because of Brexit uncertainty as one of the contributing factors to its crushing debt burden. The CAA said it had arranged an aircraft fleet for the complex British repatriation effort.
The Civil Aviation Authority has launched the largest ever peacetime repatriation to get 150,000 Thomas Cook passenger home (Photo: Screengrab/Twitter)
Richard Moriarty, chief executive of the CAA, said, “News of Thomas Cook’s collapse is deeply saddening for the company’s employees and customers, and we appreciate that more than 150,000 people currently abroad will be anxious about how they will now return to the UK.
“The government has asked us to support Thomas Cook customers on what is the UK’s largest ever peacetime repatriation.
“We have launched, at very short notice, what is effectively one of the UK’s largest airlines, involving a fleet of aircraft secured from around the world. The nature and scale of the operation means that unfortunately some disruption will be inevitable. We ask customers to bear with us as we work around the clock to bring them home.
“We urge anyone affected by this news to check our dedicated website, thomascook.caa.co.uk, for advice and information.”
Airlines including British Airways, eayJet and Virgin Atlantic are understood to have had aircraft commandeered by the CAA to help stranded holidaymakers.
Most of Thomas Cook's British customers are protected by the government-run travel insurance program, which makes sure vacationers can get home if a British-based tour operator fails while they are abroad.
Banks reject personal plea to reduce cash demands
Last night, Thomas Cook's chief executive Peter Fankhauser made a personal plea to the group's banks to slash their demand for a £200m contingency fund.
However, a source close to the banks told i that the creditors felt they had already done a great deal to support the firm.
The source said, “The banks have done a fantastic job for the past seven years, but Thomas Cook has seen more than £1bn drained out of the business, and that’s hardly the bank’s fault. The company has known about the £200m since an independent review of the business was carried out at the beginning of August.”
After the meeting finished last night, Thomas Cook’s board met into the early hours to makes the arrangements to put the company administration.
The operator, which was founded in 1841, had been in talks since early summer to seal a £900m rescue deal led by Fosun, but Thomas Cook’s banks were insisting the cash-strapped firm had to come up with the additional £200m contingency fund as a buffer to protect it during the slow winter months.
Government refuses to bail company out
Last Friday the firm turned to the Government in an attempt to secure a bailout, Foreign Secretary Dominic Raab confirmed the Government's reticence to bail out the group during an interview on the BBC's Andrew Marr show yesterday morning.
He added ministers did not "systematically step in" when businesses went under unless there was "a good strategic national interest", adding he did not want talk of contingency planning to become "a self-fulfilling prophecy".
This article originally appeared on our sister site, inews