Updated: Thomas Cook ceases trading after failing to salvage rescue deal

| September 23, 2019, 02:15

By Amie Keeley and Ian Taylor

Travel giant Thomas Cook has collapsed after last-minute efforts to secure a rescue deal failed.

The 178-year-old business ceased trading with 600,000 overseas, including 150,000 from the UK.

The CAA is to begin the biggest-ever repatriation of UK travellers with more than 45 aircraft sourced from around the world.

German authorities face organising an even bigger repatriation with up to 300,000 Germans abroad on Cook holidays.

The Thomas Cook board called in administrators after running out of options to keep the business afloat. A senior industry source said: “The board could not keep the wheels spinning. They had a legal duty.”

Thomas Cook’s failure leaves 20,000 staff, including 9,000 in the UK, out of work.

The insolvency was timed to kick in once the group’s entire fleet of aircraft were on the ground in the early hours of Monday.

The holidays of those due to fly out from today have been cancelled leaving hundreds of thousands to apply for refunds.

Chaos and confusion are expected at airports, as people turn up for cancelled services or to enquire about flights home, and at the more than 3,000 hotels used by Thomas Cook – most of which will be owed money by the group.

The group was set to be rescued in a deal worth £900 million which would have seen Fosun taking control of 75% of the company’s tour operating business and up to 25% of its airline in exchange for a £450 million capital injection.

Debt holders and lending banks would put up the remaining £450 million in exchange for control of Thomas Cook’s airline and up to 25% of the tour operator.

The deal, which had been pushed back once, was due to be voted on by creditors and stakeholders on September 27.

But last week Thomas cook’s lending banks, led by Royal bank of Scotland and Lloyds demanded it find an additional £200 million in contingency funding.

This demand for “a seasonal standby facility” followed fresh advice from financial consultants working for the banks which suggested Cook risked running out of cash once more by late 2020.

More: Comment: The long death agony of Thomas Cook

Thomas Cook CEO: Every avenue and beyond explored to try to save business

Fosun Tourism Group ‘worked tirelessly’ in attempt to restructure Thomas Cook

Insolvency Service issues redundancy payment guidance to Thomas Cook staff

Thomas Cook: Industry mourns collapse of iconic travel brand

Thomas Cook: Cross-government taskforce to support staff

Thomas Cook: A 178-year history

The Department for Transport was involved in talks over the weekend as the company explored whether the government would act as guarantor for the £200 million in credit.

However, all attempts to meet the banks’ demands failed, leading the Thomas Cook board to call in AlixPartners as administrators on Sunday evening.

‘All customers to be flown home’

A statement from the CAA said: “Thomas Cook Group, including the UK tour operator and airline, has ceased trading with immediate effect. All Thomas Cook bookings, including flights and holidays, have now been cancelled. There are currently more than 150,000 Thomas Cook customers abroad, almost twice the number that were repatriated following the failure of Monarch.

“We know that a company with such long-standing history ceasing trading will be very distressing for its customers and employees and our thoughts are with everyone affected by this news.

“The government has asked the UK Civil Aviation Authority to launch a repatriation programme over the next two weeks, from Monday September 23 to Sunday October 6 to bring Thomas Cook customers back to the UK. Due to the unprecedented number of UK customers currently overseas who are affected by the situation, the Civil Aviation Authority has secured a fleet of aircraft from around the world to bring passengers back to the UK with return flights.”

Passengers in a small number of destinations can return on alternative commercial flights, rather than directly through the Civil Aviation Authority’s flying programme, with advice available on a dedicated website thomascook.caa.co.uk

All affected customers can find information on repatriation flights, as well as advice on accommodation for both Atol and non-Atol customers on the website.

The CAA said “due to the significant scale of the situation some disruption is inevitable”, but it would endeavour to get people home as close as possible to their planned dates.

Customers currently overseas should not travel to the airport until their flight back to the UK has been confirmed on the dedicated website.

Thomas Cook customers in the UK yet to travel should not go to the airport as all flights leaving the UK have been cancelled.

The CAA said it will be launching a service to manage all refunds by September 30, with all refunds processed within 60 days.

CAA chief executive Richard Moriarty said: “News of Thomas Cook’s collapse is deeply saddening for the company’s employees and customers, and we appreciate that more than 150,000 people currently abroad will be anxious about how they will now return to the UK.

“The government has asked us to support Thomas Cook customers on what is the UK’s largest ever peacetime repatriation.

“We have launched, at very short notice, what is effectively one of the UK’s largest airlines, involving a fleet of aircraft secured from around the world. The nature and scale of the operation means that unfortunately some disruption will be inevitable. We ask customers to bear with us as we work around the clock to bring them home.”

The government said: “All customers currently abroad with Thomas Cook who are booked to return to the UK over the next two weeks will be brought home as close as possible to their booked return date.

“All Thomas Cook customers wherever they are around the world, will be brought back to the UK on special free flights or booked onto another scheduled airline at no extra cost.

“The dedicated website [www.thomascook.caa.co.uk] will provide all the information customers need to access these flights. A small number of passengers may need to book their own flight home and reclaim the costs.

“For flights back to the UK, it doesn’t matter whether customers are Atol protected or not, or what their nationality is.

“Everyone on a Thomas Cook holiday with a return flight to the UK within the two weeks will be brought home.

“Under normal circumstances, passengers who are not Atol protected would be asked to find, and pay for, their own way home.

“However, given the extent of the disruption the government is stepping in to assist impacted passengers and get people home.

“Hundreds of staff from many government departments and agencies, including the UK CAA, the Department for Transport, and the Foreign Office, will be deployed in call centres and at airports to help people.”

‘Extremely worrying time’

Abta pledged additional staff resource to help support members and customers deal with the fallout from the Thomas Cook failure.

But the association warned: “We are expecting this to be an exceptionally busy period.”

Thomas Cook Group Plc operated several businesses that sold holidays and other travel arrangements, including five companies that were Abta members:

Thomas Cook Retail Limited – ABTA W8361, J8601 & ATOL 0020
Thomas Cook Tour Operations Limited – ABTA V6896 & ATOL 1179
TCCT Retail Limited – ABTA Y6564, L8164 & ATOL 10585
Future Travel Limited – ABTA W6370, G856X & ATOL 5704
Freedom Travel Group Limited – ABTA W6417, G8381 & ATOL 6042

The airline was not a member of the association.

Abta said its immediate aim is to help members and customers to understand what steps they need to take.

Chief executive Mark Tanzer said: “Along with many others in the industry, I am extremely saddened by the news about the demise of Thomas Cook.

“It is one of the UK’s most iconic travel brands and today thousands of staff are facing losing their jobs.

“For Abta members, customers and industry colleagues, this will be an extremely worrying time.

“Abta has developed detailed advice for our members about what to do next, as well as for customers.

“Abta staff will be doing all we can to manage enquiries as swiftly as possible.”

Abta members to access advice now live on the website: https://www.abta.com/news/thomas-cook-group-advice-abta-members

Thomas Cook has faced major challenges in the last year including in May when it reported losses of almost £1.5 billion, largely down to a write-down relating to the merger with MyTravel in 2007.

It said last summer’s extended heatwave and Brexit had dampened consumer demand for holidays.

The group has closed more than 200 retail stores in the last three years as part of a review of its retail network and earlier this year Cook made 320 shop roles redundant.

Package holiday pioneer

Thomas Cook chief executive Peter Fankhauser said: “We have worked exhaustively in the past few days to resolve the outstanding issues on an agreement to secure Thomas Cook’s future for its employees, customers and suppliers. Although a deal had been largely agreed, an additional facility requested in the last few days of negotiations presented a challenge that ultimately proved insurmountable.

“It is a matter of profound regret to me and the rest of the board that we were not successful. I would like to apologise to our millions of customers, and thousands of employees, suppliers and partners who have supported us for many years. Despite huge uncertainty over recent weeks, our teams continued to put customers first, showing why Thomas Cook is one of the best-loved brands in travel.

“Generations of customers entrusted their family holiday to Thomas Cook because our people kept our customers at the heart of the business and maintained our founder’s spirit of innovation.

“This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world.”

It was set-up by English businessman Thomas Cook in 1841 when he organised his first train excursion on July 5 from Leicester to Loughborough.

The first shop was opened in 1865 on London’s Fleet Street and famous customers included Mark Twain, Oscar Wilde, Rudyard Kipling and Winston Churchill.