Thomas Cook one week later: Where are we now?
Thomas Cook, founded in 1841, was one of the world’s largest holiday businesses with 21,000 employees in 16 countries including 9,000 in the UK and more than 22 million customers every year.
Thomas Cook ran hotels, resorts, and airlines for 19 million people a year in 16 countries.
Its £1.7 billion debt burden had left it vulnerable to factors including Brexit uncertainty and the weak pound, forcing it into an abortive rescue deal led by Fosun, Chinese owner of Club Med. Thomas Cook shares plummeted from 100 to 3.50 GBX at trade time 08:00 on September 24, 2019.
A statement on the Thomas Cook Group website said the team had worked “with a range of key stakeholders over the (last) weekend” in order to secure final terms on the recapitalization and reorganization of the company. As of Friday, the company was talking with its largest shareholder, Fosun Tourism Group and its affiliates; Thomas Cook’s core lending banks; and a majority of its 2022 and 2023 senior noteholders about a request for a seasonal standby facility of £200 million on top of a £900 million injection of new capital.
“Despite considerable efforts, those discussions have not resulted in agreement between the company’s stakeholders and proposed new money providers. The company’s board has, therefore, concluded that it had no choice but to take steps to enter into compulsory liquidation with immediate effect.”
The former bosses of Thomas Cook, its auditors, and its financial regulators are to face public questions from MPs about its collapse. The committee, chaired by the Labor MP Rachel Reeves, said its inquiry would seek to question executives including the chief executive, the finance director, and the chairman, as well as its auditors, PWC and EY; the Financial Reporting Council; and the Insolvency Service, English media reported.
Ms. Reeves said: “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 raising serious questions about the actions of Thomas Cook.”
Swiss CEO Fankhauser and other directors risk a probe by the Financial Reporting Council over how much they disclosed to investors about Thomas Cook’s finances.
The CEO said: “You can reproach a lot. But I pushed everything.
“I threw everything of me into it for the last 3 months. I don’t think we as a company did something wrong.”
Handcrafted Hedonism on the Thomas Cook web site
With the official Website of Thomas Cook still on action days after the collapse it is to no comfort to anyone to read:
- We’ll be there whenever you need us. Our teams are available around the world, 24/7.
- We are happy to make you happy & we promise to put you at the hearts of everything we do.
- Your holiday means the world to us.
- We’d love to welcome you again & are committed to sending you home with great memories of your holiday.
- Reliability: We care. You can trust us to always be open and honest with you.
While the 2020 target reads:
- We will put the customer at our heart and will contribute to the communities in which we live and work.
But this was not the case.
Bosses pocketed £47 million in pay and bonuses from the doomed travel giant before the collapse that left 150,000 Brits stranded. Thomas Cook customers have accused the airlines of cashing in on the holiday firm’s demise after being faced with high bills to book replacement flights, headlines read.
The British travel group, which ceased activity last Monday after failing to secure funding is one of the largest sources of tourists to Spain bringing around 3.6 million passengers to the country every year.
Only hours prior to collapse a source familiar with the rescue talks said Thomas Cook had reached an agreement to secure £200m, with help from the Turkish government and a group of Spanish hoteliers backed by ministers in Madrid. They were willing to invest to limit the potential damage to their tourism industries. Among the Spanish hoteliers was Don Miguel Fluxa of Iberostar and Majorcan hotelier Gabriel Escarrer Juliá who founded the business that was to become Meliá Hotels.
But the initiative was not backed by the British Government.
Meanwhile in the Carnary Islands…
Spanish companies, especially in the Canary and Balearic Islands where Thomas Cook brought in an annual 3.2 million visitors, fear the collapse could lead to millions of euro in losses, while Spain’s CGT labor union has also warned that thousands of jobs could be at risk
Meanwhile, in the Canary Islands, the British travel group is responsible for 25% of all visitors, according to the hotel sector. In the Canary Islands, the CGT labor union warned that the closure of the company would affect the job stability of more than 10% of workers in the hotel sector which employs around 135,000 on the islands.
The situation in the Canary Islands is particularly precarious, given that low-cost airline Ryanair has already announced plans to shut down its base on the island of Tenerife. If Condor halts its Canary Islands operations, the area could be left without a large proportion of its connecting flights. The president of the Hotel and Tourist Accommodation Confederation (CEGHAT), Juan Molas, asked the Spanish government on Monday to call on Ryanair to reverse its decision and demand the Spanish airport authority AENA reduce airport taxes by 40%.
The economic tsunami that hit the Spanish economy with an impact of a 50 million euro loss only on the Canary Islands, will see more than 500 hotels going bankrupt, insiders believe. This will also leave over 13,000 service people without a job, reported Spanish media.
According to data from the Tourist Excellence Alliance, Exceltur, Thomas Cook owes more than €200 million to the Spanish tourism sector. Sources from the industry say that Thomas Cook settled invoices after 90 days, meaning that many bills from the summer season have been left unpaid.
“We’re up against one of the biggest economic crises that the Canaries have faced,” said Melisa Rodríguez, a Tenerife MP for the center-right Citizens party. “Sixty percent of the tourist places we offer are contracted through tour operators, and Thomas Cook is the second biggest tour operator. We could be talking about an 8% drop in GDP, which would be a very heavy economic blow.”
Ignacio López, the secretary general of the services federation of the giant workers commissions union, is blunt: “This is all new to us. We’ve never seen anything like this before; never seen the fall of a tour operator as big as Thomas Cook.”
Spain’s Canary Islands, where high season lasts from October until Easter, have been hardest hit by the fall. “It leaves us with very little capacity to respond,” says Francisco Moreno, the head of communication of the hotel chain Lopesan, which manages 17 establishments in the Canary Islands.
While 60% of the figure is owed to the hotel sector, bus companies, rental car services, guides ,and excursions – in other words the services provided by the tour operator in their holiday packages – have also been affected.
The Canaries are not the only region feeling the pressure. Authorities in Mallorca are expecting to lose 25,000 tourists in October and there is also uncertainty in Greece, Cyprus, Turkey, and Tunisia.
And what of Thomas Cook hotels?
Thomas Cook was one of the 5 largest international hotel operators in Spain, with 3 airlines (Condor, Thomas Cook Airlines, and Thomas Cook Airlines Scandinavia), and a fleet of 105 planes. In Spain, the group manages 63 hotels, most of which belong to one of 8 hotel chains. These hotels employ 2,500 workers and provide 12,000 of the 40,000 beds offered by Thomas Cook in Europe. What’s more, Thomas Cook had made more than one million reservations for the coming months, many of them in Spain. The Meliá hotel chain announced on Monday that it would refund the reservations made by Thomas Cook customers who were planning on staying at the hotel.
Money is owed not only to the hotel sector but also to the service industry and to AENA, executive deputy president of Exceltur, José Luis Zoreda, explained to Spanish news agency EFE.
Thomas Cook had expanded its business into hospitality with approximately 200 own-brand hotels in its portfolio. The company launched Thomas Cook Hotel Investments, a joint venture with Swiss-based hotel property development company LMEY Investments, to support the company’s proprietary hotel portfolio. In June, Thomas Cook announced plans to invest €40 million in its managed proprietary hotels in Spain through summer 2020.
LMEY Investments AG in Zug, Switzerland, which is of Dutch origins, owns the Club Aldiana, a brand of Holiday Clubs in Austria, Greece, Tunisia, Spain, and Cyprus and started a “strategic” partnership with Thomas Cook in 2017.
A deal that had cost 150 million British pounds and brought a 42 percent stake to Thomas Cook was meant to gain more shares in a market that has already lost shares of interest years ago due to the Internet and different ways to book travel.
The company continued to drive to grow its own-brand hotels and resorts business. Thomas Cook already had more than 50 hotels and 12,000 rooms across its 8 brands in Spain, making its hotels and resorts business one of the country’s top 5 non-domestic hotel chains. But now all are empty.
According to British media, “Thomas Cook directors need to explain why the UK airline had to be closed but the German one was allowed to continue to operate,” said the general secretary of the BALPA pilots’ union, Brian Strutton.
“How was it funded, because it seems there is nothing left in the coffers for UK staff? And why couldn’t the UK government give the same kind of bridging support as the German government when it was well known that Thomas Cook had a Chinese buyer lined up? It’s a national scandal,” Strutton added.
Thomas Cook Airlines Scandinavia’s future is uncertain. As of September 23, 2019, the Scandinavian airline suspended all flights until further notice with it later emerging that the airline had ceased operations along with its British parent company. Other subsidiaries have remained functioning.
But not for long.
Yesterday, Thomas Cook Germany announced insolvency and cease of business. Customers who booked a holiday and have not left yet, can no longer fly or go on holiday until October 31, 2019 it was announced.
They added: “We’ve unfortunately had to cancel Tui and First Choice bookings featuring Thomas Cook flights for any customers due to travel from Monday, September 23, until October 31.
But what will happen on November 1?
Thousands of holidaymakers who have booked and paid for their holidays with Thomas Cook, Neckermann Reisen, Bucher Reisen, ÖGER Tours, Signature Finest Selection, and Air Marin, will hardly see any money at all. The insurance company only covers 110 million euro, and that sum will be needed for the repatriation.
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