Thomas Cook Germany files for bankruptcy
And so the domino effect continues: Thomas Cook’s German subsidiary, Thomas Cook GmbH, is filing for insolvency and once again, holidaymakers are not sure what to do with themselves
Thomas Cook Germany has a number of German affiliates, with whom some 97,000 holidaymakers are booked to travel, including Neckermann, Öger Tours, Air Marin, Bucher Reisen, and Condor, which is 49-per-cent owned by Thomas Cook. In order to extricate itself from its parent company’s ‘financial tie-ups and related liabilities’, and also prevent its associated German brands from suffering the knock-on effects, Thomas Cook GmbH has decided to seek insolvency.
"We owe this to our long-standing customers, committed employees and other partners who have supported us so much over the years and in the last difficult weeks," said Thomas Cook GmbH Chief Executive Stefanie Berk.
Despite the large share Thomas Cook has in Condor, the company argues that it is ‘operationally healthy’, and that the six-month loan of €380 million – which it is to receive from the German Government, pending an agreement with the European Union – is intended to tide Condor over during the coming months and prevent any ‘bottlenecks’ resulting from the liquidation of Thomas Cook. It has also been reported that other companies may be interested in buying Condor due to the company’s profitable status. US-based Indigo Partners expressed an interest in Condor back in May when Thomas Cook announced it was selling off its airline business. However, as a US company not being able to own a majority share in a European airline, it remains to be seen whether this will come to pass.
The Seychelles Tourism Board (STB) – which recently expressed relief at Condor’s successful application for a bridging loan, as Condor is one of the carriers for German passengers to the Seychelles – said the information received by the STB Office in Germany is ‘that Thomas Cook Group is limiting its communication with its clients and business partners to the bare minimum, although there [have] been [a] few official bulletins and press releases issued by the group or its affiliates’.
Thomas Cook GmbH has reportedly applied to the Hesse state government and the federal government for a bridging loan and is rumoured to be in talks with the travel bankruptcy insurer, Zurich, about customer repatriation.
As was the case in the UK, travellers who booked package holidays with the airline will have financial protection from the insolvency and will have the right to repatriation.
Serious questions
To add to Thomas Cook’s woes, in the UK, former company executives are due to appear in front of MPs to answer questions about the firm’s collapse. The Business, Energy and Industrial Strategy Committee will question Peter Fankhauser, former Chief Executive of Thomas Cook, and a number of other board members about their conduct at and steering of the firm.
The investigative committee, which has been formed by a number of influential MPs, will focus on accounting practices, executives’ bonuses, the role of auditors, and the impact that Thomas Cook’s collapse has had on smaller companies and suppliers. Over the past five decades – while the travel firm’s finances were visibly struggling – top executives enjoyed more than £16 million in pay, bonuses and benefits between them.
“Amid the frustration of holidaymakers and the misery of thousands of staff losing their jobs, the collapse of Thomas Cook has uncovered what appears to be a sorry tale of corporate greed,” commented Rachel Reeves MP, Chair of the committee, “raising serious questions about the actions of Thomas Cook’s bosses and their stewardship of the business. This latest corporate failure has shone a light once again on the use of aggressive accounting methods to aid bumper payouts to company executives and the apparent inability of auditors and regulators to curb these practices in the wider interests of shareholders, investors and the public.”
The UK’s Financial Reporting Council is reportedly considering whether to launch its own investigation into Thomas Cook.