British airline and travel operator Thomas Cook has collapsed following the failure of last-ditch talks to save the company, leaving more than 600,000 passengers stranded abroad.
The firm announced this morning that it had entered compulsory liquidation after 178 years in business, putting 22,000 jobs at risk worldwide.
So, as thousands of customers scramble to get home, just what has happened at Thomas Cook and what happens next?
What was Thomas Cook?
Thomas Cook was the world’s oldest travel firm, first founded in 1841 as a railway tour operator, and came to prominence as Britain’s booming middle class sought foreign travel to Europe, US, Australia and New Zealand during the late Victorian era.
The company was nationalised by the British government following World War II and first began offering package holidays in 1950s before being privatised again in 1977 and then going through several mergers and acquisitions in the late 20th century.
Thomas Cook was bought by German firm C&N Touristic AG in 2001 and the company eventually grew to encompass 19m passengers a year with annual revenues of nearly £10bn (€11.34bn).
Why did it collapse?
Thomas Cook was carrying debts of £1.7bn (€1.93bn) and its position in the market had been destabilised by intense competition in the budget travel sector from more modern, efficient rivals.
‘Thomas Cook is operating on brochures whereas everyone else has moved on to barcodes,’ Dame Deirdre Hutton, chair of the UK’s Civil Aviation Authority (CAA), said on the BBC’s Today programme this morning.
The company, which had already agreed a £900m bailout package, said it needed a further £200m to continue trading through the leaner winter months, putting off potential lenders and creditors in 11th hour negotiations yesterday.
The £900m (€1.02bn) rescue package agreed would have been half funded by Chinese company Fosun, which demanded 75pc of the tour operator business and 25pc of the airline in return.
The other £450m (€501m) would have been put up by Thomas Cook’s creditors, who had agreed to covert the company’s debt into equity, giving them control of the other 75pc of the airline and the remaining 25pc of the tour operator.
What happens now?
Thomas Cook made an application for compulsory liquidation to the British high court in London this morning, which has since been accepted. AlixPartners UK or KPMG will be appointed receivers for the businesses.
All Thomas Cook companies have ceased trading, and all Thomas Cook flights have been cancelled and all Thomas Cook stores have closed as a result.
The British government and the CAA are now working to bring the 150,000+ British holidaymakers stranded abroad home over the next couple of weeks. More than 600,000 Thomas Cook travellers have been left overseas.
‘If you are booked on a Thomas Cook Airlines flight, please do not go to your UK airport, as your flight will not be operating,’ the CAA advised. ‘The Civil Aviation Authority’s repatriation programme will not include any outbound flights from the UK.’
Only customers abroad with return flights booked for before October 6 will be repatriated by the British government.
What has Thomas Cook said?
‘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,’ Thomas Cook CEO Peter Fankhauser said.
‘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. It is a matter of profound regret to me and the rest of the board that we were not successful,’ he added.
‘This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world.’
The company also blamed, political unrest in popular holiday destinations, a prolonged heatwave last summer and delays in customers booking holidays due to Brexit for its collapse.
Are any Irish people affected?
The Irish Travel Agents Association said the number of Irish holidaymakers affected was ‘minimal’.
Thomas Cook shuttered its tour operator business in the Republic 10 years ago, but the company did operate ‘a dozen’ flights a week out of Belfast still. It later emerged that 600 of the 6,000 passengers from Belfast caught up in the collapse live in the Republic.
The Commission for Aviation Regulation has directed any Irish passengers affected to the CAA to arrange travel back to the UK.
‘If you are [Air Travel Organisers’ Licensing] protected you will be reimbursed for the cost of your new flight,’ the regulator said. ‘At the time of booking you should have received an ATOL certificate. Please visit the above website to check to see if you are covered and if so for what.
‘If you are not covered by ATOL, you should contact your card issuer, bank, or travel insurer for advice on whether you can claim a refund. Some non-flight packages or hotel bookings may be protected by trade organisations in the UK such as [the British Travel Association].’
One Irish Thomas Cook customer living in Leicestershire spoke to BBC Radio Five Live’s Stephen Nolan about his horrific experience at a Tunisian hotel this weekend after concerns about the company were raised.
How has the market reacted?
Shares in Thomas Cook’s rivals increased in the wake of the firm’s collapse as a capacity in the budget travel market shrinks with stable demand.
Shares in TUI rose 8.4pc while easyJet was up 6.1pc and Ryanair increased 2.6pc in early morning trading as investors anticipated the companies to benefit similarly to how they did from the collapse of airline Monarch in May.