British Travel Firm Thomas Cook Collapses
The world's oldest travel firm, Thomas Cook, has collapsed, stranding hundreds of thousands of holidaymakers around the globe and sparking the largest peacetime repatriation effort in British history.
British prime minister Boris Johnson pledged to get stranded British travellers home and revealed that the government had rejected a request from Thomas Cook for a bailout of approximately £150 million 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, the holidaymakers who may now face difficulties getting home. We will do our level best to get them home," he told reporters on a plane as he headed to the UN General Assembly in New York.
The liquidation marks the end of one of Britain's oldest companies. Thomas Cook started life in 1841, running local rail excursions before it survived two world wars to pioneer package holidays and mass tourism.
The firm ran hotels, resorts and airlines for 19 million people a year in 16 countries. It currently has 600,000 people abroad, forcing governments and insurance companies to coordinate a huge rescue operation.
CEO Peter Fankhauser said that 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 talks that went through the weekend.
The UK's Civil Aviation Authority (CAA) said that Thomas Cook had ceased trading and that the regulator and government had a fleet of planes ready to start bringing home the more than 150,000 British customers over the next two weeks.
"I would like to apologise to our millions of customers and thousands of employees, suppliers and partners who have supported us for many years," Fankhauser said in a statement. "It is a matter of profound regret to me and the rest of the board that we were not successful."
Pictures posted on social media showed Thomas Cook planes being diverted away from the normal airport stands. Some were left deserted once passengers and staff had departed. Employees posted pictures of themselves walking from their last flights.
"Love my job so much, don't want it to end," Kia Dawn Hayward, a member of the company's cabin crew, said on Twitter.
The government and aviation regulator said that, due to the scale of the situation, some disruption was inevitable. All of the company's flights have been cancelled.
Customers were told not to travel to airports until they have been told via a special website - thomascook.caa.co.uk - that they were due on a return flight that was being organised by the government.
The British regulator is also contacting hotels hosting Thomas Cook customers to tell them that they will be paid by the government through an insurance scheme. That was after some were briefly held in a hotel in Tunisia when staff asked for additional payments to be made.
Gary Seale, a guest at the Orangers Hotel in Hammamet, Tunisia, posted on Facebook on Saturday September 21 that "security have refused to let us out of the hotel and barricaded us in". He later posted that he had reached the airport and flew home on Sunday September 22.
British transport minister Grant Shapps said that the government had managed to "acquire planes from across the world" to get people home, and call centres had been established to answer travellers' queries.
In Germany, a major customer market for Thomas Cook, insurance companies will coordinate the response.
The corporate collapse has the potential to spark chaotic scenes around the world, with holidaymakers stuck in hotels that have not been paid in locations as far afield as Goa, Gambia and Greece.
In the longer term, it could also hit the tourism sectors in the company's biggest destinations, such as Spain and Turkey, leave fuel suppliers out of pocket and force the closure of its hundreds of travel agents across British high streets.
Thomas Cook has been brought low by a £1.7 billion debt pile, online competition, a changing travel market and geopolitical events that can upend its summer season. Last year's European heatwave also hit the company hard as customers put off last-minute bookings.
The group had seemed set for a rescue when it agreed the key terms of a £900 million recapitalisation plan in a deal with its biggest shareholder, China's Fosun, and the travel firm's banks in August.
But in finalising the terms of the deal, the company was hit with a demand for another facility of £200 million in underwritten funds by its banks.
Johnson said that Thomas Cook's collapse raises questions over whether directors of travel companies are "properly incentivised" to avoid bankruptcy.
"We need to look at ways in which tour operators, one way or another, can protect themselves from such bankruptcies in future, and clearly the systems that we have in place to make sure [they] don't in the end come to the taxpayer for help," he said.
Fosun said that it was disappointed by the company's failure to strike a deal with its banks and bondholders, and noted that it had remained supportive throughout.
The recapitalisation plan was "no longer applicable given the compulsory liquidation" of Thomas Cook, Fosun said in a statement.
With headlines swirling that Thomas Cook was in trouble, suppliers started calling in their debts and future customers went elsewhere, draining the company of the cash it needed to keep operating.