Thomas Cook Files for Bankruptcy, Leaves over 600,000 Travelers Stranded
Thomas Cook, a 178-year-old British travel company and airline, declared bankruptcy early Monday morning local time in the UK, suspending operations and leaving hundreds of thousands of tourists stranded around the world.
The travel company operates its own airline, with a fleet of nearly 50 medium and long-range jets, and owned several smaller airlines and subsidiaries, including German carrier Condor. Thomas Cook still had several flights in the air as of Sunday night, but was expected to cease operations once they landed at their destinations.
Condor posted a message to its site late Sunday night saying that it was still operating, but it was unclear whether that would change. Condor's scheduled Monday morning flights appeared to be operating normally.
Around 600,000 Thomas Cook customers were reported to be traveling, of which were 150,000 British and were abroad, scheduled to fly home with Thomas Cook, the company told CNN.
The British Department for Transport and Civil Aviation Authority (CAA) prepared plans, under the code name "Operation Matterhorn," to repatriate stranded British passengers. According to the CAA, those rescue flights would take place between September 23 and October 6, leading to the possibility that travelers could be delayed for up to two weeks.
Initial rescue flights seemed poised to begin immediately, with stranded passengers posting on Twitter saying that they were only being delayed a few hours as they awaited chartered flights.
The scale of the task has reports calling it the "largest peacetime repatriation effort" in British history, including the operation the government carried out when Monarch Airlines collapsed in 2017.
Costs of the flights were expected to be covered by the ATOL— or Air Travel Organiser's License — protection scheme, a fund which provides for repatriation of British travelers if an airline ceases operations.
Airplanes from British Airways and easyJet would be among those transporting stranded passengers home, according to the Guardian, as well as chartered planes from leasing companies and other airlines. Thomas Cook Airlines' destinations included parts of mainland Europe, Africa, the US, the Caribbean, and the Middle East. Airplanes were being flown to those destinations on Sunday night, according to the BBC.
The company was still selling tickets until Sunday night in the UK.
One Plymouth, England-based traveler who had booked a holiday to the Greek island Zakynthos for August 2020, told Business Insider that she saw Thomas Cook had charged her more than £600 by direct debit on Sunday afternoon for the trip — she said that she was not due to be charged until September 26th. It was unclear whether she would be able to recoup the funds with the bankruptcy declaration. She asked not to be named in this article.
On Sunday, Thomas Cook was left scrambling to secure £200 million — about $249 million — in emergency funding following a demand from its lenders. The company's executives were believed to have met Sunday with its biggest shareholder and creditors at a London law firm, according to Sky News and iTV.
Reports indicated that the tour operator failed to secure the needed funds during the meeting.
Although Thomas Cook had reached an agreement for a £900 million rescue deal, with Chinese company Fosun Tourism Group providing half of that funding, creditors had demanded the British company secure an additional £200 million.
Thomas Cook owns a Nordic operation, as well as airlines in the UK, Germany and northern Europe — proposals to fund those, while letting the UK tour operating arm fail, were deemed unfeasible, according to Sky News, as have several other options which would take too long to implement. It was not immediately clear whether Condor was being funded separately.
Thomas Cook, as well as a union representing some of its 9,000 UK employees, had sought an emergency funding plan from the British government. However, government sources "had questioned the financial wisdom of stepping in to save the company," according to the BBC. The company employs 21,000 globally.
The company had filed for Chapter 15 bankruptcy protection in the US last week, although it stopped short of declaring insolvency.
Although Thomas Cook had managed to recover from a risk of insolvency in 2011, it continued to be held back by lingering debts. It also suffered by lower demand over the past two summer travel season, as major heatwaves led many Britons to stay home. Brexit uncertainties and a weak pound also contributed, according to the Telegraph.Monday
Source: Business Insider