Having announced last week that it required £200 million of contingency funds to stave off administration, it seems that the end has come for the iconic travel brand. Eleventh-hour negotiations intended to save the 178-year-old company, which has been struggling for some time, failed, and Thomas Cook has now ‘ceased trading with immediate effect’, according to the UK Civil Aviation Authority (CAA).
The most alarming and immediate consequence of this is the thousands of travellers who are currently overseas and were expecting to have their travel home covered by their tour operator. As a result, the largest ever peacetime repatriation operation in UK history has been launched to ensure that the 150,000 British holidaymakers will be able to get home; 16,000 of these were due to come back today. The chair of the CAA, Dame Deirdre Hutton, said that all affected customers will be brought home for free when their holidays end, adding that Thomas Cook’s failure to take advantage of modern technology was partly to blame for what has happened: “[The firm] is operating on brochures whereas everyone else has moved on to barcodes.”
Usually, customers not protected under ATOL would have to pay for their own transport home, but as these are extraordinary circumstances, the UK Department of Transport has said that all passengers will be helped for free, regardless of ATOL status – although the rescue flights will only operate for a fortnight from today, with travellers whose return flights fall beyond that cutoff point needing to organise their own transport. The UK Government has reportedly chartered a fleet of 45 jets for today’s effort, which will fly 64 routes, technically making it the UK’s fifth largest airline for the period of action.
Of course, it’s not just Brits who are stranded – Thomas Cook has over half a million customers currently abroad, so other governments and insurance companies will be stepping up to launch similar rescue efforts.
As well as the many staff whose livelihoods will be thrown into question by Thomas Cook’s collapse – 9,000 people in the UK alone – other companies will also be affected; the travel firm has many business partners and subsidiaries around the world, including German airline Condor, which will reportedly be asking for financial aid from Germany’s government so that it can keep operating. The Turkish tourism ministry has also announced that it will be putting together a loan support package for companies that are suffering collateral damage.
Thomas Cook reportedly requested a bailout from the UK Government but was refused, though opposition leaders have said that the government could – and should – still act. Shadow Chancellor of the Exchequer John McDonnell has even said that Thomas Cook bosses should pay back their hefty bonuses as a matter of conscience.
“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,” said Peter Fankhauser, Chief Executive of Thomas Cook, in a statement hosted on the company’s website. “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.
“This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world.”
Rebecca Thornley-Gibson, a partner at UK law firm DMH Stallard, commented: "Most of the travel industry were on a constant refresh on their phones in the early hours of this morning anxiously waiting to see if their worst fears would be allayed. Devastatingly for the industry they were not, and the Thomas Cook Group disappeared from the travel landscape this morning.
"There are, and will continue to be. multiple impacts from the loss of 9,000 jobs in the UK in Thomas Cook. The impact on a short-term basis will be mitigated by the rights of employees to claim payments including arrears of pay, statutory redundancy, holiday and notice payments from the Insolvency Service. If these are paid promptly, employees will at least have some time to catch their financial breath as they seek alternative roles elsewhere.
"A very sad day for Thomas Cook, the travel industry and all those ancillary supply services that will now face uncertainty due to their future loss of revenue."
Insurer AXA has said that it is currently dealing with three times the usual number of claims-related calls it would expect, and has set up a dedicated page on its website to help confused and worried travellers.