The international travel industry was shocked on Monday with the news of one of British travel and tourism firm Thomas Cook, one of the largest and the oldest in the industry, on Monday after months of efforts to rescue the company failed. The collapse of the 178-year-old travel company resulted in hundreds of thousands of travelers getting stranded on their vacations and business partners now having to deal with financial pressure.
After the company failed to organize a rescue deal or a package even after prolonged negotiations with banks, shareholders and the UK government meant that “it had no choice but to take steps to enter into compulsory liquidation with immediate effect,” said the Thomas Cook’s board on Monday morning.
The collapse has put under threat the jobs of about 21,000 employees of Thomas Cook and about 150,000 British holidaymakers stranded in foreign countries. The stranded passengers are now reliant on the rescue efforts of the UK government’s Civil Aviation Authority to bring them home, which would constitute the biggest peace time repatriation to be conducted by the UK.
The complex supply chain of Thomas Cook all across the world meant that the impact of the its collapse started to hit the international travel industry very fast.
Sale of holidays for all of its local travel companies, which include Neckermann Reisen, Öger Tours and Thomas Cook Signature, were stopped in Germany by Thomas Cook.
About 140,000 German travelers have been affected, according to the German news agency DPA.
Thousands of jobs were at stake in the Canary Islands and the Balearics, warned Spain’s opposition Ciudadanos party. A crisis for those hotels that worked exclusively for Thomas Cook was also impending, said the Turkish Hoteliers Federation.
For Thomas Cook’s biggest shareholder, the Chinese conglomerate Fosun, this collapse is also a huge blow. The Chinese firm had offered £450m from its part as a part of a rescue package for the company.It was “disappointed” and that “its position remained unchanged throughout the process, but unfortunately other factors have changed”, the Chinese firm said in a statement.
An investigation into the quick collapse of the company will be conducted by Andrea Leadsom, Britain’s business secretary. The investigation will look into the role of the company’s management who were criticized on Monday that they had availed exorbitant salaries while the company declined. The current chief executive of the company is Peter Fankhauser.
The process of restructuring of the company would be done by the restructuring specialist AlixPartners pending approval from the court. Arrangement for the repatriation of its customers is expected to be done by AlixPartners along with the CAA, Thomas Cook said.
There had been pressure on the UK government which had been approached by Thomas Cook last Friday to arrange for a bailout package for the company. “Having a granny stranded in Tunisia is not a good look,” said a report quoting a source familiar with the discussions.
While going to attend the UN General Assembly in New York, UK prime minister Boris Johnson, told reporters that “it’s true a request was made to the government for a subvention of about £150m. Clearly that’s a lot of taxpayers’ money and sets up a moral hazard in the case of future such commercial difficulties that companies face.”
(Source:www.ft.com)
After the company failed to organize a rescue deal or a package even after prolonged negotiations with banks, shareholders and the UK government meant that “it had no choice but to take steps to enter into compulsory liquidation with immediate effect,” said the Thomas Cook’s board on Monday morning.
The collapse has put under threat the jobs of about 21,000 employees of Thomas Cook and about 150,000 British holidaymakers stranded in foreign countries. The stranded passengers are now reliant on the rescue efforts of the UK government’s Civil Aviation Authority to bring them home, which would constitute the biggest peace time repatriation to be conducted by the UK.
The complex supply chain of Thomas Cook all across the world meant that the impact of the its collapse started to hit the international travel industry very fast.
Sale of holidays for all of its local travel companies, which include Neckermann Reisen, Öger Tours and Thomas Cook Signature, were stopped in Germany by Thomas Cook.
About 140,000 German travelers have been affected, according to the German news agency DPA.
Thousands of jobs were at stake in the Canary Islands and the Balearics, warned Spain’s opposition Ciudadanos party. A crisis for those hotels that worked exclusively for Thomas Cook was also impending, said the Turkish Hoteliers Federation.
For Thomas Cook’s biggest shareholder, the Chinese conglomerate Fosun, this collapse is also a huge blow. The Chinese firm had offered £450m from its part as a part of a rescue package for the company.It was “disappointed” and that “its position remained unchanged throughout the process, but unfortunately other factors have changed”, the Chinese firm said in a statement.
An investigation into the quick collapse of the company will be conducted by Andrea Leadsom, Britain’s business secretary. The investigation will look into the role of the company’s management who were criticized on Monday that they had availed exorbitant salaries while the company declined. The current chief executive of the company is Peter Fankhauser.
The process of restructuring of the company would be done by the restructuring specialist AlixPartners pending approval from the court. Arrangement for the repatriation of its customers is expected to be done by AlixPartners along with the CAA, Thomas Cook said.
There had been pressure on the UK government which had been approached by Thomas Cook last Friday to arrange for a bailout package for the company. “Having a granny stranded in Tunisia is not a good look,” said a report quoting a source familiar with the discussions.
While going to attend the UN General Assembly in New York, UK prime minister Boris Johnson, told reporters that “it’s true a request was made to the government for a subvention of about £150m. Clearly that’s a lot of taxpayers’ money and sets up a moral hazard in the case of future such commercial difficulties that companies face.”
(Source:www.ft.com)
