How Thomas Cook collapse affected stranded travelers
Thomas Cook, the world's oldest travel firm, collapsed on Monday, stranding hundreds of thousands of travelers around the globe.
The firm ran hotels, resorts and airlines for 19 million travelers a year in 16 countries, generating revenue in 2018 of 12 billion U.S. dollars. It currently has 600,000 people abroad, including more than 150,000 British citizens.
Thomas Cook employs 21,000 people and is the world's oldest travel company, founded in 1841.
Thomas Cook's Twitter account.
Thomas Cook's Twitter account.
Why did it collapse?
Thomas Cook was brought low by a debt pile of 2.1 billion U.S. dollars that prevented it from responding to more nimble online competition. With debts built up around 10 years ago due to several ill-timed deals, it had to sell three million holidays a year just to cover its interest payments.
As it struggled to pitch itself to a new generation of tourists, the company was hit by the 2016 coup attempt in Turkey, one of its top destinations, and the 2018 Europe-wide heatwave which deterred customers from going abroad.
Thomas Cook needed another 200 million pounds (248 million U.S. dollars) on top of a 900 million pound (1119 million U.S. dollars) package it had already agreed, to see it through the winter months when it receives less cash and must pay hotels for summer services.
The request for an additional 200 million pounds torpedoed the rescue deal that had been months in the making.
Thomas Cook bosses met lenders and creditors in London on Sunday to try to thrash out a last-ditch deal to keep the company afloat. They failed.
Under the original terms of the plan, top shareholder Fosun – whose Chinese parent owns all-inclusive holiday firm Club Med – would have given 450 million pounds (552 million U.S. dollars) of money in return for at least 75 percent of the tour operator business and 25 percent of its airline.
Thomas Cook's lending banks and bondholders were to stump up a further 450 million pounds and convert their existing debt to equity, giving them in total about 75 percent of the airline and up to 25 percent of the tour operator business.
What happens to tourists?
Prime Minister Boris Johnson pledged to get stranded British travelers home, another headache for his government as it tries to negotiate a fiendishly complicated withdrawal from the European Union.
Thomas Cook's German airline subsidiary, Condor, said there were 240,000 people booked on its flights awaiting a return home. Its flights are still operating for now, and it has asked the German government for a bridging loan. In Germany, insurance companies coordinate any repatriation.
There are around 50,000 holidaymakers affected in Greece, and around 35,000 from Nordic countries using Thomas Cook.
The British government has asked the UK's Civil Aviation Authority (CAA) to launch a repatriation program over the next two weeks, from Monday to October 6, to bring Thomas Cook customers back to the UK. CAA said it had a fleet of planes ready to bring home the more than 150,000 British customers.
The CAA has launched a special website, thomascook.caa.co.uk, where affected customers can find details and information on repatriation flights.