Following a meeting in London yesterday, British travel firm and charter airline operator, Thomas Cook, has gone bankrupt.
Yesterday, Thomas Cook met with key players in an attempt to avert a collapse. The British travel firm needed to secure £200m of extra funds if it was to prevent bankruptcy. The last-ditch meeting took place at a law firm in the City and was attended by Thomas Cook’s creditors as well as its largest shareholder, Chinese conglomerate Fosun.
As of around 02:15 am London Time Thomas Cook has officially declared bankruptcy. As such, the airline has stopped operating flights. Additionally, ticket sales have ceased. Meanwhile, Condor, a subsidiary of Thomas Cook, says that flights are operating as normal as of around 10 PM UTC.
Peter Fankhauser, Chief Executive of Thomas Cook commented:
“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. 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.
Now, the UK’s biggest repatriation since WW2 will take place, this repatriation is dubbed ‘Operation Matterhorn’ and will see over 150,000 Thomas Cook passengers flown back to the UK using wet-leased aircraft, and aircraft from other airlines.
At the time of writing this article (10 PM UTC), a Malaysian Airlines Airbus A380 which can seat up to 494 passengers is flying on a one-way flight from Kuala Lumpur to Manchester, England. One of Thomas Cook’s largest bases. It is rumored that the UK government has drafted in this empty plane for Operation Matterhorn.
Below is a screenshot of the superjumbo racing towards Manchester at over 500mph:
Worried passengers took to Twitter to express their concern, asking the company for updates and for any clarification as to what would happen going forward. To every question, Thomas Cook’s customer service operators gave the same response:
hello We are working on recapitalisation plans to provide financial stability for the Thomas Cook Group going forward. All our package holidays are fully ATOL-protected and our flight and holiday operations continue to operate as normal.^Tony
— Thomas Cook (@ThomasCookUK) September 22, 2019
But as the afternoon wore on, the chances of a rescue deal were looking slim. At around 2 PM, BST, Bloomberg reported that the UK government was unlikely to agree to bail out the struggling airline. The outlet reported Foreign Secretary Dominic Raab as saying,
“We don’t systematically step in with the taxpayer’s money when businesses are going under unless there is a good strategic national interest for doing so.”
Despite the bleak outlook for the situation, at least where government funds were concerned, Raab vowed not to leave passengers stranded. He told the BBC,
“We would wait to see and hope that [Thomas Cook] can continue but in any event, as you would expect, we’ve got the contingency planning in place to make sure that in any worst-case scenario we can support all those who might otherwise be stranded.”
Although passengers and employees of Thomas Cook must have been feeling worried, the overall atmosphere was one of support. At the time of writing, more than 50,000 individuals had signed a petition urging the government and lenders to help Thomas Cook. Within the reasons for signing, many people professed their love for the brand, calling it a ‘fabulous company’ and a ‘British icon’.
How many people will be affected?
Thomas Cook is no longer in a position to repatriate its thousands of customers who are abroad. This means that ATOL protection will step in to get these holidaymakers home.
Right now, the BBC estimates that there are around 600,000 Thomas Cook customers on holiday. Of these, between 150,000 and 160,000 are British. While those who had booked a package holiday through the agent will be ATOL protected, anyone who has only booked a flight with Thomas Cook Airlines will not have this protection.
On Saturday, tourists at the Les Orangers beach resort in Hammamet, near Tunis, said they were ‘being held hostage’ in the hotel. Guests were apparently not being allowed to leave unless they paid the extra money, as the hotel was fearful of the travel agent’s collapse.
As well as stranded holidaymakers, the collapse of this company brings with it a risk of around 22,000 jobs worldwide. In the UK, 9,000 workers are employed by Thomas Cook.
What to do if you’re affected?
You will most likely be protected by ATOL. Each ATOL holder (Thomas Cook is an ATOL holder) is required to pay a £2.50 fee for each passenger within a booking. This money is then put into a fund owned by the Air Travel Trust which is used when passengers are stranded and need a refund and repatriation.
The Civil Aviation Authority website states that ATOL protection will prevent you from being stranded if the company you booked with collapses before or during your holiday. If the collapse happens before your holiday, you will be eligible for a full refund or a replacement holiday. If the collapse happens during your holiday, then “the scheme will provide support to minimize disruption to your holiday.”
What will happen to Thomas Cook’s fleet?
As of July 2019, Thomas Cook Airlines, part of the overall Thomas Cook group has a fleet of 34 aircraft. This includes 27 short/mid-haul A321-200’s and 7 long-haul A330-200’s.
It is expected that these planes will be sold off to other airlines in order to help re-pay Thomas Cook’s crazy £1.7b debt. To get an idea of where the planes could go, we have articles on what happened to WOW Air’s fleet, and what happened to Monarch’s fleet.
This is a developing story. Our thoughts are with the stranded holidaymakers and staff of Thomas Cook at this difficult time.