After last-ditch efforts and desperate negotiations failed, Thomas Cook, the 178-year old iconic holiday firm collapsed. The brand was synonymous with holidays across the globe. The UK Civil Aviation announced that the company has “ceased trading with immediate effect.” This has left a staggering 150,000 plus British people stranded at various holiday destinations.
The immediate fallout of the incident is that it is likely to put around 22,000 employees out of job worldwide. The world’s most trusted and popular holiday brand was founded in 1841 by cabinet-maker Thomas Cook in Leicestershire.
Reports state that 16,000 holidaymakers were booked to come back on Monday. At least 14,000 are expected to be home on chartered flights which have been arranged by the Government to help stranded tourists. The Operation Matterhorn will see 45 jets flying on 64 routes to bring back British holidaymakers. The jets have been provided by easyJet and Virgin.
A bailout request of £250m was shot down. Transport Secretary Grant Shapps said, “I fear it would have kept them afloat for a very short period of time and then we would have been back in the position of needing to repatriate people in any case.” The company has some large debts making survival chances extremely bleak.
Shadow chancellor John McDonnell supported a bailout for Thomas Cook while Prime Minister Boris Johnson pledged to help stranded holidaymakers. Apart from the 150,000 Britons are affected by Thomas Cook’s collapse, there are approximately 350,000 to 450,000 customers stuck abroad.
The government has announced that customers will be on special free flights or any other scheduled airline at no extra cost. A dedicated website will carry the details of each flight. Some passengers might have to make their own arrangements and claim costs later.
Customers have been requested not to change their holiday itinerary or go to the airport without checking the website for related information. Hotels are being informed that their costs will be covered by the government. This is being done through ATOL or the Air Travel Trust Fund and Air Travel Organiser’s Licence scheme.
At least for the near future, the company’s Indian, Chinese, German and Nordic subsidiaries will continue to run their business as usual as they are legally considered as separate businesses. However, as these entities do share aircraft and IT resources with their parent company, they might have to handle rescue deals in the coming weeks.
Thomas Cook had secured a £900m rescue deal from its largest shareholder Chinese firm Fosun in August. However, the process was derailed when the banks wanted then to raise a further £200m in contingency funding. The holiday tried to overcome the crisis by meeting it’s with lenders and trying to secure more funding but couldn’t pull it off.
Travelers on a Thomas Cook package holiday covered by the ATOL scheme are likely to have less trouble than those who do not have the cover.
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