British travel group, Thomas Cook declared bankruptcy after failing to reach a last-ditch rescue deal. From job losses to cancelled honeymoons, the demise of the package tour pioneer has brought a heavy human cost and left hundreds of thousands of vacationers stranded worldwide. About 600,000 people across the world were stranded after the travel giant collapsed and halted almost all its flights and hotel services, triggering the biggest repatriation since World War II to bring back stranded passengers.
About 600,000 people stranded worldwide
Overall, about 600,000 people were travelling with the company when all its flights to and from the UK were cancelled. The UK government has taken charge of getting the firm’s 150,000 U.K.-based customers back home from vacation spots across the globe, the largest repatriation effort in the country’s peacetime history. A rescue fleet of more than 40 jumbos will bring 150,000 stranded holidaymakers back to Britain from 53 destinations in 17 countries. The process has begun and officials have warned of delays owing to travel chaos.
The biggest ever peacetime repatriation will involve around 1,000 flights from 53 airports and in 18 countries. Also free flights will be offered to the majority of passengers abroad. While the rescue mission for the stranded travelers could take up to a fortnight, here is the impact of the collapse of Thomas Cook in numbers
Over 21,000 employees lose their jobs
More than 21,000 employees across the world, including 9,000 in the UK, were out of work after the travel company collapsed overnight. Employees were seen sobbing as they left the company’s headquarters carrying plastic boxes filled with their belongings after news broke that they had lost their jobs. Despite efforts made to secure the additional £200 million required by lenders to safeguard the 9,000 UK jobs, the giant travel company was unable to find the funds.
Reason for Bankruptcy
The biggest tourist firm since 1841, which started with a one-day train excursion in England and now has business in 16 countries, has been struggling financially for years due to competition from budget airlines and the ease of booking low-cost accommodations through the internet. It’s problems started way back in 1994 when the “open skies” agreement allowed upstarts easyJet and Ryanair to flourish. Things worsened in 2019 with a slowdown in bookings on the uncertainty over Brexit. While a drop in the pound made it more expensive for British vacationers to travel abroad, heat waves in Northern Europe and terror attacks in Egypt and Tunis hurt its business.
The cover up its mounting debts, the company secured a £900m rescue deal led by its largest shareholder Chinese firm Fosun in August. But a recent demand from its banks to raise a further £200m in contingency funding put the deal in doubt. The holiday company spent all of Sunday in talks with lenders and creditors in London on Sunday to try to thrash out a last-ditch deal to keep the company afloat, but to no avail. Thomas Cook collapsed bringing a huge blow to many companies in vacation resorts that have long relied on it for business. It had sweeping effects across the entire European and North African tourism industry. Hotels were worried about being paid and confirmed bookings for high-season winter resorts were suddenly in doubt.
Thomas Cook enters Liquidation
The 178 year-old tour operator had been desperately seeking £200 million from private investors to save it from collapse. However, the collapse was confirmed by the UK Civil Aviation Authority (CAA) stating Thomas Cook Group has ceased trading with immediate effect and all bookings, including flights and holidays, have now been cancelled. After failing to secure emergency funding, the firm entered compulsory liquidation. An order had been granted to appoint an official receiver to liquidate the company. AlixPartners UK LLP or KPMG will be the forthcoming special managers for the different parts of the business.
Refunds to customers by Atol
Generally, Thomas Cook’s customers in UK are protected by the government-run travel insurance program, Atol which makes sure vacationers can get home if a British-based tour operator fails while they are abroad. The package holiday customers will also see the cost of their accommodation covered by Atol. Those who have not yet started their package holiday will be given a refund, while those on flight-only bookings are advised to seek reimbursement from their credit or debit card provider, or make a claim through their travel insurer. According to the CAA, the majority of the £100 million cost of the repatriation programme will be met from funds held by the Atol scheme, with the Government also making a contribution.
UK government refuse to rescue Thomas Cook
The UK government has refused to bail out the company. While traveling to New York for the UN General Assembly, British Prime Minister Boris Johnson said that travel firms should do more to ensure they don’t get bankrupt in future. Perhaps, bailing out the in-debt company would be more “a moral hazard” as other tour operators too might be expecting the same treatment.
Thomas Cook CEO apologizes
Peter Fankhauser, the Thomas Cook CEO said; “I would like to apologize to our millions of customers, and thousands of employees, suppliers and partners who have supported us for many years.” He bid farewell marking the sad day for the company which pioneered package holidays and made travel possible for millions of people worldwide.