Thomas Cook Collapses

[J-2739]

From yesterday (sorry if already discussed in full):
https://news.sky.com/story/thomas-cook-seeks-last-ditch-fire-sale-in-bid-to-avert-collapse-11814043

Thomas Cook Group is scrambling to stitch together a last-ditch fire-sale in a bid to stave off collapse and avert the biggest-ever peacetime repatriation of British citizens.

Sky News has learnt that the 178 year-old travel agent has this week been holding emergency talks about a deal to offload its Nordic airline and tour operating units in a desperate attempt to raise cash.

Thomas Cook has been left with a £200m black hole in its finances following a demand by lenders to secure new standby funding on top of a £900m restructuring package that is due to be voted on next week.

Insiders said the company was examining "every possible option" as it tries to salvage a rescue deal with more than 20,000 jobs across the group at risk.

Roughly 9,000 people work for Thomas Cook in the UK.

A big shame to see them in this state. We remember using them last year for a long haul flight, and how cheap they were compared to the alternatives.

 

[cactustwirly]

From yesterday (sorry if already discussed in full):
https://news.sky.com/story/thomas-cook-seeks-last-ditch-fire-sale-in-bid-to-avert-collapse-11814043


A big shame to see them in this state. We remember using them last year for a long haul flight, and how cheap they were compared to the alternatives.

I don't think they will last much longer, with speculation they could collapse by Sunday evening.
Very much a shame.

 

[J-2739]

I don't think they will last much longer, with speculation they could collapse by Sunday evening.
Very much a shame.

Just as big a shame for their customers, who could be now stranded across the world, creating a logistical nightmare.

 

[FrodshamJnct]

Emails have now apparently gone out to hotels informing them TC have gone bust and bookings no longer valid.

9M-MNF is currently on the way to MAN - rumour is it’s being brought in by the CAA to help with the repatriation of customers.

 

[Tetchytyke]

Emails have now apparently gone out to hotels informing them TC have gone bust and bookings no longer valid.

Some hotels have apparently taken it on themselves to extort money from holidaymakers. Should be interesting.

And all because an otherwise profitable company got loaded with debt.

 

[Techniquest]

Emails have now apparently gone out to hotels informing them TC have gone bust and bookings no longer valid.

9M-MNF is currently on the way to MAN - rumour is it’s being brought in by the CAA to help with the repatriation of customers.

This is certainly a shame, gotta feel for the thousands of people suddenly out of work. Especially with a certain time of the year fast approaching.

Another big player gone!

 

[TheEdge]

So Thomas Cook has officially ceased trading and the CAA have begun Operation Matterhorn to repatriate.

I guess Titan and Air Tanker will be busy for the next few weeks...

 

[Crawley Ben]

So Thomas Cook has officially ceased trading and the CAA have begun Operation Matterhorn to repatriate.

I guess Titan and Air Tanker will be busy for the next few weeks...

I understand Easyjet, Virgin Atlantic & British Airways will also be involved with the repatriation of holidays makers who are currently stranded abroad.

I've always found Thomas Cook to be most helpful when I've dealt with them in a professional capacity (@ Gatwick). I feel for the thousands of staff who now find themselves unemployed. Hopefully they will find alternative employment in due course.

Ben

 

[cactustwirly]

This is certainly a shame, gotta feel for the thousands of people suddenly out of work. Especially with a certain time of the year fast approaching.

Another big player gone!

At the moment, I really feel for all the resort reps, who will suddenly be stuck in a foreign country without a job, and loads of angry customers.

 

[Bletchleyite]

And all because an otherwise profitable company got loaded with debt.

Not an unusual story - it sounds rather similar to the ill-advised Britannia takeover by the small but reasonably stable Co-operative Bank which almost caused that to collapse and left it a shadow of its former self.

 

[Bletchleyite]

At the moment, I really feel for all the resort reps, who will suddenly be stuck in a foreign country without a job, and loads of angry customers.

Indeed, it's always the staff that really lose in this kind of case

 

[TheEdge]

At the moment, I really feel for all the resort reps, who will suddenly be stuck in a foreign country without a job, and loads of angry customers.

Are they entitled to the same repatriation rights as holiday makers? Is it the job ofthe administrators to get them back? Or are they on their own?

I'm sad to see Thomas Cook go, I've booked a few package holidays through them and also used them a few times on an airline only basis.

Obviously related, I see news Condor have approached the German government for help. Given the other international parts of the group have gone how have Condor stayed flying, so far?

 

[cactustwirly]

Are they entitled to the same repatriation rights as holiday makers? Is it the job ofthe administrators to get them back? Or are they on their own?

I'm sad to see Thomas Cook go, I've booked a few package holidays through them and also used them a few times on an airline only basis.

Obviously related, I see news Condor have approached the German government for help. Given the other international parts of the group have gone how have Condor stayed flying, so far?

I'm not sure, they're certainly not ATOL protected, since Thomas Cook are the ones that fly them to and from the UK. I would imagine they are on their own.

 

[TheEdge]

Someone had posted about a Malaysian A380 being used, looks like that is the case. A few flights from Palma are all being replaced with a single flight to Manchester operating as MH991.

 

[Bletchleyite]

Someone had posted about a Malaysian A380 being used, looks like that is the case. A few flights from Palma are all being replaced with a single flight to Manchester operating as MH991.

I bet any kids on holiday there will love that!

 

[ainsworth74]

I'm not sure, they're certainly not ATOL protected, since Thomas Cook are the ones that fly them to and from the UK. I would imagine they are on their own.

Assuming that the liquidators can't/won't make arrangements for them I guess their only choice is to fund their own travel back to the UK and then register as a creditor to try and recover the costs they incurred (as well as anything else they've missed out on like pay in lieu of notice). Though usually employees who list as creditors recover pennies if anything at all as they're right at the bottom of the heap when distributing whatever funds can be raised by the liquidator.

Someone had posted about a Malaysian A380 being used, looks like that is the case. A few flights from Palma are all being replaced with a single flight to Manchester operating as MH991.

I suppose that's quite efficient really! Wonder how they'll decide who gets to use the business class seats/suits

 

[StaffsWCML]

They need to change the law so that the banks are the last people to get the money left over when a business is liquidated.

All to often the banks play hard ball over the funds, they often cause many a business to fail with their obscene demands charges/fees/interest rates, as a result the employees and customers should be refunded first. If a bank wants its money back it should do everything it can to help a ailing business stay afloat.

Banks are absolute scum, I understand the scummy RBS (not for the first time) are the ones refusing to refinance their debts. Its a shame we didn't let those absolute scumbags fail in 2008/09. The only duty to the government had in 2009 was to ensure savers didn't lose their money, they should have let those banks fail.

 

[Meerkat]

So Thomas Cook is important but systemically important banks should be allowed to fail?

 

[Bletchleyite]

So Thomas Cook is important but systemically important banks should be allowed to fail?

An odd attitude - people work for banks, and people have their pension funds invested in banks, just like any other companies. It is overall no more desirable for a bank to fail than a travel agent.

FWIW it's worth doing some reading into how corporate accounting works and how a seemingly profitable company can fail. It's quite interesting - until I did an OU business studies module I didn't understand it at all. What you use at home or what charities/voluntary organisations use is cash accounting - you either have the money to spend sat there in your account (and not offset from it due to a not yet cashed cheque) or you don't. Business accounting is much woolier than that.

 

[bussnapperwm]

Surely it would have been cheaper for the Government bail out Thomas Cook in return for a share of the company than it would be to organise these repatriation flights?

 

[Howardh]

https://thomascook.caa.co.uk is the official "get me home" site; I'm due back (IBZ-MAN) on Wednesday week and if I look at that site the day before it should give me a flight at around the same time as the original, but may be landing in a different airport (ie Birmingham) and they will bus me back from there - or I can take the train (quicker, easier, and with food!).

Although I have an alternative planned, a floght IBZ/BCN/MAN if it all goes Grayling-up.

So if you know anyone abroad right now, please direct them to that site if they don't already know.

 

[Bletchleyite]

Surely it would have been cheaper for the Government bail out Thomas Cook in return for a share of the company than it would be to organise these repatriation flights?

I'm sure they will have looked at that - that rather depends on the extent of the debt (and the effect of setting that precedent) - it might well have been cheaper to do the flights.

 

[Darandio]

Surely it would have been cheaper for the Government bail out Thomas Cook in return for a share of the company than it would be to organise these repatriation flights?

A lot of people are saying the same thing this morning. The problem is that it may well be cheaper to bail them out this morning, but they may have needed four times that amount next week. And that's without all of the debt and trying to reorganise a company haemorrhaging £billions.

 

[cactustwirly]

I'm sure they will have looked at that - that rather depends on the extent of the debt (and the effect of setting that precedent) - it might well have been cheaper to do the flights.

I suspect that it was, Thomas Cook would have needed a lot of work to even break even, with a lot of debt it needs to pay.
It's the end of the season, so TC should have had plenty of money, the fact they needed £200M just to stay afloat is very worrying

 

[mmh]

Surely it would have been cheaper for the Government bail out Thomas Cook in return for a share of the company than it would be to organise these repatriation flights?

A CAA spokeswoman was interviewed on Radio 4 Today this morning. The presenter said multiple times the repatriation would cost 100 million, and while she didn't confirm that she didn't deny it either. (She was on to purely give advice and the presenter irritatingly wanted her to answer politically loaded questions)

If that's true, a bail out would cost 100 million. Not much, especially taking into account the cost of the jobs lost.

It's a pretty fundamental part of Conservatism that private enterprise should be allowed to succeed or fail by itself, though.

 

[StaffsWCML]

So Thomas Cook is important but systemically important banks should be allowed to fail?

No, what I am saying is how come the banks get bailed out but then refuse to renegotiate finance for other businesses. We see this time and time again.

Banks would have us believe they are 'systematically important', as long as the central bank isn't failing, they are actually just another poorly run business.

Thomas Cook has been badly managed for years - yes. There was a good offer on the table from Fosun that invested a lot of capital and would have secured the jobs and holidays for thousands, this seemingly has been blocked by some halfwit at RBS probably because it was not at a rate beneficial to them.

To be honest some of these banks are the scurge of society. They charge criminal interests rates, in many cases they know its best for them to force a business into liquidation as they are secured creditors and will get back a far larger percentage of the money than joe public, they have also been receiving debt payments and interest for many years.

Surely in some cases its better for them to cut/freeze interest and help the business to continue trading, especially when a good take over bid is on the cards.

 

[pdeaves]

Surely it would have been cheaper for the Government bail out Thomas Cook in return for a share of the company than it would be to organise these repatriation flights?

There's probably a complex set of rules about government financial support to keep a business running, compared to getting stranded citizens home.

 

[Tetchytyke]

Though usually employees who list as creditors recover pennies if anything at all as they're right at the bottom of the heap

In terms of wages, the National Insurance fund will pay up if they're treated as UK employees, so employees shouldn't lose out.

When Monarch went bump they brought everyone home, ATOL or not, so I'd expect a similar offer to be made to Thomas Cook's British staff.

I'm not sure what would happen to the Germans though, who are Thomas Cook's biggest market (old Condor). I see Condor are still trading

 

[Tetchytyke]

To be honest some of these banks are the scurge of society. They charge criminal interests rates, in many cases they know its best for them to force a business into liquidation as they are secured creditors and will get back a far larger percentage of the money than joe public, they have also been receiving debt payments and interest for many years.

We'll make a socialist of you yet

You are right, though. The banks lend the money for the leveraged takeovers, they get a cut of the sale price, they get interest, they get other management fees. And if the company goes bump they get their capital back as secured creditors.

The people who led the leveraged takeover take as much money out as they can "to repay their investment" and the company is left to fund the debt.

Thomas Cook hasn't adapted as quickly to the online market as they might have, but the fundamental issues are the debt, which all stems from the merger of Thomas Cook and MyTravel back in the mid 2000s.

 

[Bletchleyite]

There's probably a complex set of rules about government financial support to keep a business running, compared to getting stranded citizens home.

Particularly given that if you knew your business would be bailed out if it failed, you might take more risks with it? (TOCs, anyone?)