British travel firm Thomas Cook collapses, leaving hundreds of thousands stranded
LONDON (Reuters) – The world’s oldest travel firm Thomas Cook (TCG.L) collapsed on Monday, stranding more than half a million holidaymakers around the globe and sparking the largest peacetime repatriation effort in British history.
The liquidation marks the end of a British company that started in 1841 running local rail excursions before pioneering the package holiday and growing into one of the world’s largest tour operators.
It ran hotels, resorts and airlines for 19 million people a year in 16 countries. Employing 21,000, it currently has 600,000 people abroad, forcing governments and insurance companies to coordinate a huge rescue operation.
Prime Minister Boris Johnson pledged to get stranded British travellers home, increasing pressure on the government just as it tries to negotiate an incredibly complicated withdrawal from the European Union.
He said the government had rejected a bailout request of about 150 million pounds ($187 million) from Thomas Cook because doing so would have set up a “moral hazard”.
“It is a very difficult situation and obviously our thoughts are very much with the customers of Thomas Cook,” Johnson told reporters on a plane as he headed to the U.N. General Assembly in New York. “We will do our level best to get them home.”
Thomas Cook has been brought low by a $2.1 billion debt pile that prevented it from responding to more nimble online competition. With debts built up around 10 years ago due to several ill-timed deals, it had to sell three million holidays a year just to cover its interest payments.
As it struggled to pitch itself to a new generation of tourists, the company was hit by the 2016 coup attempt in Turkey, one of its top destinations, and the 2018 Europe-wide heatwave which deterred customers from going abroad.
Chief Executive Peter Fankhauser said it was a matter of profound regret that the company had gone out of business after it failed to secure a rescue package from its lenders in frantic, knife-edge talks over the weekend.
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 bring home the more than 150,000 British customers over the next two weeks.
The impact could already be felt further afield, with Australian travel group Webjet Ltd (WEB.AX) saying it was 27 million euros out of pocket and British online travel group On The Beach (OTB.L) saying it would suffer from helping its customers in resorts who had flown with Thomas Cook.
The collapse could provide a boost, however, to major rival TUI (TUIGn.DE), whose shares surged more than 8% in early Monday trading, and to Europe’s overcrowded airline sector, which could benefit from the closure of Thomas Cook’s airline business.