Thomas Cook Financial Troubles – Should You Be Concerned?

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Thomas Cook has put its airline operations up for sale. With multiple bids, the Thomas Cook troubles may be coming to an end. However, if you’re a passenger, there is some uncertainty as to Thomas Cook’s state of affairs. After some losses, Thomas Cook has put its airline divisions up for sale and received a few different offers.

Thomas Cook has placed its airline divisions on the market. Photo: Thomas Cook

Half-year results

On May 16, 2019, Thomas Cook released their half-year results for 2019. While indicating their losses, the release also spoke in regards to the sale of the group’s airline operations. Multiple investors have placed bids for all and part of the airlines in the Thomas Cook Group. Some of these bidders include Virgin Atlantic and Lufthansa.

Furthermore, the release spoke about some of the issues the Thomas Cook Group faced that hindered their profitability. In looking to the future, Thomas Cook indicated that “recent economic and political uncertainty” and “higher fuel costs” are some of the challenges going forward in 2019. Airlines across the globe have felt the crunch of higher fuel costs, although others have still remained profitable.

Thomas Cook’s airlines took a hit from political and economic uncertainty and high fuel costs. Photo: Thomas Cook

Airlines bid for Thomas Cook

Thomas Cook’s airline operations are split between two major identifiable entities. Thomas Cook Airlines (which has several, smaller regional subsidiaries) and Condor. Bids have been received for all and for part of the airline group. Significantly, we know that Lufthansa has expressly bid for Condor. In addition, Virgin Atlantic is suspected to also be involved in bidding for Thomas Cook’s UK long-haul operations.

Virgin Atlantic could acquire Thomas Cook’s long-haul UK operations. Photo: Thomas Cook

On the other hand, there is Condor. Condor is a German airline catering primarily to leisure travelers. Lufthansa has expressed a keen interest in Condor. The primary appeal for Lufthansa to acquire Condor is Frankfurt. Condor is based in Frankfurt, and Lufthansa could tighten their grip on the city as a hub. Whether Lufthansa retains Condor’s long-haul leisure operations or farms them out will be closely watched.

Lufthansa’s acquisition of Condor would give them a strong hold on Frankfurt. Photo: Thomas Cook

What about passengers?

Since a number of investors have shown an interest in Thomas Cook’s airline operations, it is likely the group will successfully sell them off. At that point, chances are, your tickets should be honored by the acquiring group. Whether it be Lufthansa, Virgin Atlantic, or a private holding company, they will likely keep your vacation plan intact.

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In the case of airlines acquiring the business, they also have an obligation to passengers since they are also acquiring tickets that the airline has promised to future passengers. Should an airline negotiate the cancellation of those tickets, chances are you’ll be rerouted on another carrier, or you may find yourself with a refund.

57% of Thomas Cook’s summer schedule has been sold. This represents a significant number of passengers. No doubt, governments and airlines will want to see those passengers taken care of.

57% of Thomas Cook’s summer schedule has already been sold. Photo: Thomas Cook

Overall

It is unlikely that Thomas Cook would go under before the completion of a sale. Most likely, Thomas Cook’s individual airline groups will be sold out.

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If you’re a ticketed passenger, it is advisable to wait and watch carefully. Having a backup plan is always a good idea in case the unfortunate happens. If you’re planning a trip with Thomas Cook, you’re probably better off waiting and seeing what happens with Thomas Cook’s airlines. Or, if you need to book soon, it might be safer to go for another carrier.

We’ll keep you posted on the updates at Thomas Cook here at Simple Flying.

Have you flown with Thomas Cook? Do you think Lufthansa should purchase Condor? Should Virgin Atlantic win Thomas Cook’s UK long-haul operations? Let us know in the comments!

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