KT edit: Thomas Cook's demise is the end of an era in leisure travel

Some 600,000 people who had booked holidays with the operator have been affected with the company going bust.



Published: Mon 23 Sep 2019, 9:00 PM

Last updated: Mon 23 Sep 2019, 11:16 PM

The first task for the British government after the insolvency of the world's oldest travel company Thomas Cook would be to repatriate 150,000 travellers who had booked their holidays via the firm back to the country. Travellers have been stranded after the 178-year old holiday operator drowned in a sea of debt and collapsed on Monday. Bringing them back to the UK could be the largest peace-time civilian airlift in British aviation history. Some 600,000 people who had booked holidays with the operator have been affected with the company going bust.
It needed £200 million to stay afloat during the winter months when profits take a hit, but last-ditch efforts failed late on Sunday. So why did Thomas Cook, a pioneer of big-ticket travel, go under? The answers are clear: high debt levels, online bookings, economic and geopolitical uncertainty. It had already struck a deal for £900 million with a Chinese company and banks. The second request for an additional infusion of £200 million hurt that rescue deal. Fosun, the Chinese company, had initially agreed to convert debt into equity by funding £450 million. In return, it would control 75 per cent of the tour operator business, while holding 25 per cent of the airline it runs. Banks and bondholders would fork out another £450 million, which would give them control of 75 per cent of the airline and 25 per cent of the tour operator business.
But the operator wanted more, and bankruptcy struck in an instant. Travel disruptions are expected over the next week, but the UK's Civilian Aviation Authority said it is deploying extra flights to bring people home. Then there is the issue of 21,000 staff at Thomas Cook who now face an uncertain future. Unions in the UK said the government should have stepped in to prevent the collapse of the company. They called it 'economic vandalism' after more than a decade of British legacy disappeared in a flash. But Thomas Cook was too big to fail and the signs were ominous from last year. As the UK government and parliament remain deadlocked over Brexit, Thomas Cook's demise will be seen as the end of a long journey. There is little appetite to revive an old business model as the political stalemate continues. Digital disruption has indeed hit old-world travel agencies as the world gets more connected and people discover places on their own.
 


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