Thomas Cook, the world’s first and oldest travel agent, has gone bust, ceased all operations, and entered into compulsory liquidation early on Monday Morning, U.K. time. The fallout has left over 600,000 travelers across the globe requiring repatriation. In the U.K. alone there are over 150,000 Thomas Cook customers currently on foreign shores. The majority of these British passengers will be repatriated as part of ‘Operation Matterhorn’ under the Air Travel Operators License (ATOL) a U.K. organization which ‘underwrites’ all package holidays sold by tour operators. However, this scheme does not cover those who only bought flight tickets.
This is the largest repatriation of British citizens since the evacuation of Dunkirk during the Second World War when over 190,000 British troops were rescued from the beaches of northern France. Thomas Cook has been looking for a financial bailout for many months and in August it agreed a £900 million deal with Fosun Tourism (Fosun), a Chinese company which, among others, owns Club Med. That deal would have seen Fosun take a 75% stake in the travel agency arm of Thomas Cook and a 25% stake in its commercial airline operations, while bankers and bondholders would have exchanged debt of £450 million for equity in the form of a 25% stake in the travel agency and a 75% stake in the airline. The deal would have seen over £1.5 billion in equity written off and ordinary shareholders lose out completely.
Prior to ceasing operations, the share value of Thomas Cook had fallen 90% this year to £0.045 per share, giving the company which last year dealt with over 19 million customers and which recorded a £9 billion turnover, a value of just £70 million. Subsequent to the Fosun deal, banks then requested an additional cash injection of £200 million to see the stricken company through the traditionally slow winter season and which it has struggled to secure. On order to renew its ATOL operator’s license, due at the end of this month, Thomas Cook would also have to have proven it had sufficient funds, or access to sufficient funds in order to remain operational for the next 12 months.
Despite desperate last-minute talks with bankers and investors yesterday (Sunday), the company was unsuccessful in raising the additional funds, resulting in Thomas Cook entering into compulsory liquidation. The company employed over 20,000 staff worldwide and over 9,000 in the U.K and while it would have cost bankers £200 million to keep the company afloat, it is estimated that repatriating 15,000 British holidaymakers will cost ATOL and the UK’s Civil Aviation Authority (CAA) £600 million. (£1.00 = US$1.24 at time of publication.)
