British travel giant Thomas Cook Goes Bankrupt Leaving 600,000 Passengers Stranded

Thomas Cook plane

The British oldest travel firm and charter airline operator,Thomas Cook has gone bankrupt as well collapsed on Sunday , thereby cancelling all bookings leaving hundreds of thousands of people stranded around the globe.

The 178-year-old British tour operator, needed to secure £200m of extra funds if it was to prevent bankruptcy after failing to reach a last-ditch rescue deal, triggering the UK’s biggest repatriation since World War II to bring back stranded passengers.

The UK’s Civil Aviation Authority (CAA) said the world’s oldest travel agency had now ceased trading after 178 years in business.

The firm ran hotels, resorts and airlines for 19 million travellers a year in 16 countries, generating revenue in 2018 of 9.6 billion pounds ($12 billion). It currently has 600,000 people abroad, including more than 150,000 British citizens.

In a statement, Thomas Cook said it was unable to reach an agreement between its stakeholders and proposed money providers, adding that “it had no choice but to take steps to enter into compulsory liquidation with immediate effect.”

The travel agency said that due to the scale of the situation, “some disruption is inevitable” but that the Civil Aviation Authority “will endeavor to get people home as close as possible to their planned dates.”

“Thomas Cook has ceased trading so all Thomas Cook flights are now canceled,” the travel company confirmed.

The last-ditch meeting took place at a law firm in the City and was attended by Thomas Cook’s creditors as well as its largest shareholder, Chinese conglomerate Fosun.

”An application was made to the High Court for a compulsory liquidation of the Company before opening of business today and an order has been granted to appoint the Official Receiver as the liquidator of the Company”.

Peter Fankhauser, Thomas Cook’s chief executive, apologized to customers, employees, suppliers and partners saying; “I would like to apologise to our millions of customers, and thousands of employees, suppliers and partners who have supported us for many years, this marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world”.

The collapse of the iconic UK company is having ripple effects in Asia. Shares in Chinese firm Fosun Tourism dropped more than 5% in morning trade in Hong Kong. Fosun Tourism’s parent company Fosun International is one of China’s biggest conglomerates. It owns all-inclusive holiday firm Club Med. Billionaire founder Guo Guangchang is Thomas Cook’s largest stakeholder, according to data provider Refinitiv.

“Fosun is disappointed that Thomas Cook Group has not been able to find a viable solution, We extend our deepest sympathy to all those affected by this outcome, for its financial troubles,” the company said in a statement.

Some 600,000 people, including 140,000 Germans and 150,000 Britons, were estimated to be on holiday with Thomas Cook and are currently stranded abroad.

Its four airlines will be grounded and more than 20,000 staff worldwide are expected to lose their jobs.

In Germany, one of Thomas Cook’s biggest markets, insurance companies will help repatriate customers, according to an official.

German charter airline Condor, which comes under the insolvent travel operator’s umbrella, has applied for a bridging loan from the government. The carrier also said that, for now, flights will remain operational.

Other German tour operator subsidiaries under Thomas Cook include brands such as Neckermann, Reisen, Bucher Last Minute, Öger Tours, Air Marin and Thomas Cook Signature. According to their statements, travel sales have also ceased.

The UK government and the aviation regulator had drawn up a plan to use other airlines to bring Britons home, triggering the country’s biggest repatriation effort since World War II.

The UK Civil Aviation Authority also tweeted that all Thomas Cook bookings have been canceled. The move triggers the largest ever peacetime repatriation in the history of the United Kingdom, topping the operation the government carried out after the 2017 collapse of Monarch Airlines.

In a statement, the aviation authority said there are “more than 150,000 Thomas Cook customers abroad, almost twice the number that were repatriated following the failure of Monarch.” It said the government has asked it to launch a repatriation program, which would return Thomas Cook customers to the United Kingdom, from September 23 – October 6.

“Due to the unprecedented number of UK customers currently overseas who are affected by the situation, the Civil Aviation Authority has secured a fleet of aircraft from around the world to bring passengers back to the UK with return flights,” it said.

Thomas Cook customers that only booked hotel stays will not be bailed out by the aviation authority. ATOL protection only applies to hotels when booked as part of an air inclusive holiday package.

The aviation authority launched a website where customers can find details on repatriation flights. “Customers currently overseas should not travel to the airport until their flight back to the UK has been confirmed on the dedicated website,” it said.

Depending on where travelers are located, return flights will be either on flights operated by the aviation authority or by existing flights with other airlines, according to Thomas Cook.

Thomas Cook 555

For Thomas Cook travelers abroad on holiday packages protected by the Air Travel Organiser’s Licence, the aviation authority said it will sort out hotel bills. ATOL is a UK financial protection program that protects most air package holidays sold by UK-based travel businesses.

“While arrangements are being made, please do not make a payment to your hotel unless instructed otherwise by the CAA team,” the aviation authority said. “If our guarantee is not accepted by the accommodation provider, we may need to relocate you to another hotel for the duration of your stay.”

The CAA offered advice to passengers who had already booked Thomas Cook flights. “Customers currently overseas should not travel to the airport until their flight back to the UK has been confirmed on the dedicated website.”

The British Prime Minister said that the government should not bail out Thomas Cook, arguing that doing so would create “a moral hazard” because other firms might expect similar treatment in the future.

“We need to look at ways in which tour operators one way or another can protect themselves from such bankruptcies in future,” Johnson said. “One is driven to reflect on whether the directors of these companies are properly incentivized to sort such matters out.”

While the UK government rejected Thomas Cook’s request for a bailout of about £150 million ($187 million), Johnson pledged to return stranded British holidaymakers.

It is expected that Thomas Cooks Airlines, part of the overall Thomas Cook group has a fleet of 34 aircraft. This includes 27 short/mid-haul A321-200’s and 7 long-haul A330-200’s will be sold off to other airlines in order to help re-pay their crazy £1.7b debt.

Source: (Reuters, dpa, AFP, AP]

About KokoLevel Blog Staff 3722 Articles
Advertisement, Content marketing and  sponsored post: contact : Kokobest04@gmail.com