Thomas Cook has ceased trading after talks failed to produce a funding lifeline for the ailing travel company, placing 9,000 British jobs at risk and triggering a huge repatriation effort to bring home 150,000 UK holidaymakers overseas.
The Civil Aviation Authority announced at 2am on Monday morning that the world’s oldest holiday company had gone into liquidation and that all flights and bookings had been cancelled.
“Thomas Cook Group, including the UK tour operator and airline, has ceased trading with immediate effect,” the aviation regulator said in a statement. “All Thomas Cook bookings, including flights and holidays, have now been cancelled.”
The official administration was timed for the early hours when the largest number of the 94-strong fleet of planes were on the ground.
Peter Fankhauser, Thomas Cook’s chief executive, said the tour operator’s collapse was a “matter of profound regret” as he apologised to the company’s “millions of customers, and thousands of employees”.
The government and the CAA have now triggered the UK’s largest ever peacetime repatriation – codenamed Operation Matterhorn – to bring holidaymakers home.
Speaking to reporters on his plane heading to the UN general assembly in New York, Boris Johnson hinted at possible government action against directors of travel firms who presided over bankruptcies. The prime minister said that in the wake of the collapse of the budget airline Monarch and Thomas Cook, it was time to “reflect on whether the directors of these companies are properly incentivised to sort such matters out”.
Johnson said it did not seem the government could have done more to help, for example agreeing to Thomas Cook’s request for a £150m bailout. “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,” he said. “We will do our level best to get them home.”
The Guardian understands that airlines including British Airways and easyJet will be involved in the airlift for holidaymakers using Thomas Cook, whose destinations range from mainland Europe to north Africa, the Middle East, the US and the Caribbean.
The foreign secretary, Dominic Raab, said on Sunday that the government had contingency plans in place for passengers and sought to reassure holidaymakers that they would not end up stuck overseas. The company had appealed to ministers for a bailout but Raab said the government did not “systemically step in” unless it was in the national interest.
“We would wait to see and hope that [Thomas Cook] can continue but in any event, as you would expect, we’ve got the contingency planning in place to make sure that in any worst-case scenario we can support all those who might otherwise be stranded,” Raab told the BBC.
A last-ditch meeting at a law firm in central London between Thomas Cook executives and stakeholders including the firm’s largest shareholder, Chinese conglomerate Fosun, came to a close after 5pm on Sunday, ending talks that began at 9am.
The tour operator is understood to have made a number of proposals, including asking lenders to reduce a £200m demand for extra funding and for credit card companies to release about £50m of cash they are holding as collateral against Thomas Cook bookings.
Thomas Cook’s chief executive, Peter Fankhauserleft the meeting through the City law firm’s loading bay flanked by colleagues without saying anything about the deal. He also stayed quiet when asked if he had any message for customers trapped abroad.
No comment from Thomas Cook’s CEO Peter Fankhauser as he left out of the loading bay of Latham & Watkins law firm following crunch talks over the company’s future pic.twitter.com/tjzRbbP220
— Kalyeena Makortoff (@kalyeena) September 22, 2019
Thomas Cook has struggled to cope with a £1.7bn debt burden. The 11th-hour meeting came after the company had agreed a £900m bailout – but was then told to find another £200m, which proved a step too far.
Meanwhile, Thomas Cook holidaymakers were anxious that they might be evicted from their hotels or charged again for their holidays. Holiday companies do not normally pay hotels until up to 90 days after guests have left.
Customers at a hotel in Tunisia reported being locked in by security guards as the hotel demanded extra money, fearing it would not be paid by Thomas Cook. However, the company said the dispute had been resolved and holidaymakers were able to leave the hotel.
Thomas Cook also attempted to reassure worried customers that their package holidays were protected under the Atol scheme, which guarantees the bookings of package holidaymakers. Atol covers holiday accommodation as well as return flights if customers are abroad at the time of a collapse. Future bookings are also protected.
The total cost of holidaymakers’ guarantees to be paid by the Atol scheme – underwritten by the Civil Aviation Authority watchdog – is an estimated £600m now that the company has gone bust.
The business, which also has significant operations in mainland Europe, employs 21,000 people, including 9,000 in the UK. It has a total of 600,000 people on holiday currently, including British travellers, with Germany and Scandinavia among its major customer bases alongside Britain. It also operates about 560 shops on UK high streets.
Quick GuideThe history of Thomas Cook
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Thomas Cook owes its name to a humble and deeply religious 32-year-old cabinet-maker who, one June morning in 1841, hiked the 15 miles from his home in Market Harborough to Leicester, to attend a temperance meeting.
The former Baptist preacher believed that the ills of Victorian society stemmed largely from alcohol and, presumably fatigued from his walk, realised he could deploy the power of Britain’s flourishing rail network to help spread the word.
Addressing the temperance meeting, he suggested that a train be hired to carry the movement’s supporters to the next meeting in Loughborough.
Thus, on 5 July 1841, some 500 passengers travelled by a special train for the 24-mile round trip, paying a shilling apiece.
Over the next few years, Cook laid on ever more trains, introducing thousands of Britons to train travel for the first time. The first such outing to be run for commercial purposes was a trip to Liverpool in 1845.
Over the next decade or so, the business expanded to offer overseas trips, to France, Switzerland, Italy and beyond, to the US, Egypt and India.
His more business-minded son John expanded the tour operator and its reach was such that the government enlisted its expertise in an effort, ultimately in vain, to relieve General Gordon at the siege of Khartoum in 1885.
John’s three sons inherited the business, which incorporated as Thos Cook & Son Ltd in 1924 and benefited from the increasing ease of international travel.
Its first flirtation with collapse came during the second world war, when the government requisitioned some of its assets and it was sold to Britain’s railway companies, effectively a nationalisation.
But it boomed in the postwar years as growing prosperity fuelled the appetite for holidays and it returned to private ownership in 1972.
Since then, it has changed hands and changed shape via a series of mergers and takeovers. It nearly collapsed in 2011 but averted its demise with a bailout deal funded by banks.
Now, after 178 years of operation, it has ceased trading.
Mike Churcher, a 63-year-old retiree, who is currently on a Thomas Cook package holiday with his wife and 22-year-old son at the Royal Wings hotel in Antalya, Turkey, said he also feared being thrown out of his hotel.
He told the Guardian: “There’s no information. It’s all very stoic – we’re all stiff upper lip, they’re all tight-lipped … we don’t think they’ve been paid for our holiday [by Thomas Cook] yet so we’re worried they may throw us out … my concern is that if Thomas Cook goes under we could get turfed out. The Royal Wings staff are being very nice now though.”
Bryan Ferriman, 82, who is staying on Greek island of Leros with his wife, Louise Robertson, and has flights back to the UK with the tour operator booked for later this week.
He said: “We have a flight from Kos to Birmingham late evening on Thursday … Kos airport is not a good place to be stranded in. I have tried to email Thomas Cook but this is impossible and phoning is futile.”
Revealing that the couple had made a flight-only booking that is not covered by Atol, he added: “We are independent and the suggestion is that this is a disadvantage given the present circumstances and that package holiday people will get preference in any rescue operation.
“I am familiar enough with this country to possibly find a room in a town five miles away, but who carries the cost here? ”
The Transport Salaried Staffs Association (TSSA), a trade union that represents workers at the company, said the British government should be ready to assist with “real financial support”.
Thomas Cook was founded in 1841 by Derbyshire cabinet-maker Thomas Cook. The first Thomas Cook holiday took customers 12 miles by train from Leicester to a temperance meeting in Loughborough. But it would be another four years before Cook got into the tourist business proper, organising train trips from Leicester, Nottingham and Derby to Liverpool. Scottish tours and trips to mainland Europe soon followed.
In 1928 the family sold up to the Belgian owners of the Orient Express, but the second world war saw it become part of the nationalised British Railways. After the war, sales took off again with the era of package holidays. By 1950, more than a million Britons were travelling abroad each year, mainly to France, Italy, Spain and Switzerland.
Thomas Cook returned to private ownership in 1972 and has seen a series of mergers and takeovers. In 2007, it merged with the UK-listed owner of Airtours, MyTravel Group, which nearly collapsed in 2011 but was bailed out by its banks. The rescue left Thomas Cook with a debt burden of £1.7bn and the company struggled to cope, leaving administration as the only option.
