Thomas Cook Collapses

[Tetchytyke]

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

There isn't, the German government have lent money to Condor to keep that part of the business going.

The question is whether any help would save the business. For Thomas Cook it's doubtful, in which case you'd just be throwing another £200m down the drain.

 

[philjo]

The BBC have reported that Great Northern are allowing refunds on train fares to Luton or Gatwick for Thomas Cook customers.

Also any Thomas Cook passengers arriving back at Luton or Gatwick earlier or later than planned can use their tickets on the next available train service on Great Northern, Thameslink, southern or Gatwick Express.

https://www.bbc.co.uk/news/live/bus...88923917953a0663cfa047&pinned_post_type=share

 

[M28361M]

The Rail Delivery Group is now saying ticket restrictions have been relaxed for Thomas Cook customers on all TOCs. Press release:-

Train companies are relaxing ticket rules to help Thomas Cook customers affected by the company’s collapse.

Whether people were booked on specific services as part of their Thomas Cook package or had booked trains separately to get them to their holiday, train operators will let people catch the first available service with the original train operators they were due to travel with. Where people have booked tickets for holidays they will no longer be taking, people should contact their train operator to see if they can get a fee free refund.

In both instances, people will just need to demonstrate that they were a Thomas Cook customer, for example by showing a booking confirmation, e-ticket or boarding pass.

 

[Meerkat]

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

Not sure how you worked that out. The £900m takeover failed for needing another £200m. So either the government need buy the company for £1.1bn or lend £200m to a Chinese company to takeover.
Then it gets politically ugly as there are inevitably thousands of job cuts.

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.

A major banking failure would probably have caused a major system failure due to all the interlinking. A bit less important now due to the living wills but the banking system is still built significantly on confidence - break that and things get very ugly, very fast.

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

You seem to think the banks should just keep throwing good money after bad. Being a secured creditor makes little difference if there is no cash and no assets. What do Thomas Cook own? The planes are leased, the shops are probably leased.

 

[LAX54]

seems they needed 150 million to tide them over, pending the deal, but of course this was declined by the Government, but, today on TV it was quoted that it will take 100 million funded by the taxpapyer, to get everyone back home over the next few weeks, so add that to the poeple now on the dole, 150 million would have been cheaper overall ! but however you look at it, the taxpayer will end up funding it all.

 

[ainsworth74]

seems they needed 150 million to tide them over, pending the deal, but of course this was declined by the Government, but, today on TV it was quoted that it will take 100 million funded by the taxpapyer, to get everyone back home over the next few weeks, so add that to the poeple now on the dole, 150 million would have been cheaper overall !

And when Thomas Cook came back in a few months needing another £150m? And a few months after that needing more money, and then another bailout and so on and so on? When do you draw the line?

The company has gone into liquidation not administration. Which tells you that the company was financially dead. If it had a chance of continuing as a going concern (or at least parts of it did) then it wouldn't be forced into liquidation and would have gone into administration pending a possible sale. The fact that that step has been skipped should tell people quite a lot about the state of the underlying business...

 

[Meerkat]

seems they needed 150 million to tide them over, pending the deal, but of course this was declined by the Government, but, today on TV it was quoted that it will take 100 million funded by the taxpapyer, to get everyone back home over the next few weeks, so add that to the poeple now on the dole, 150 million would have been cheaper overall ! but however you look at it, the taxpayer will end up funding it all.

So you think the government should lend money to a Chinese company who will then probably make a significant number of the employees redundant anyway?

 

[StaffsWCML]

A major banking failure would probably have caused a major system failure due to all the interlinking. A bit less important now due to the living wills but the banking system is still built significantly on confidence - break that and things get very ugly, very fast.



You seem to think the banks should just keep throwing good money after bad. Being a secured creditor makes little difference if there is no cash and no assets. What do Thomas Cook own? The planes are leased, the shops are probably leased.

If the government Guarantees certain aspects critical to the function of the economy. I don't really see the issue if for example RBS goes its just another business badly run.

They basically bailed them out and allowed them to continue their gambling.

They were not throwing good money after bad its more a bridging loans till takeover, there was a good take over offer on the table from Fosun but the banks as usual were being greedy probably to fund their bonus pots. The other questions are if Thomas Cook own very little then what is it they actually owe, its old made up money by the banking institutions and they are the one who can decide to pull the plug. They will get a percentage of their money back as they are priority creditors, more than they deserve, already on top of interest and charges they have accrued which probably outweighs the original loans. Really banks are absolute scum.

Obviously we have a huge problem here as most of our economy relies on banks in the City but they are vile institutions who profit out of business and individuals in financial distress. There should be a limit on the interest rates they can charge, and they should be forced to tie it more closely to the base rate which means nothing now. These scumbags will happily charge 20% interest of Credit Card, 5-20% on loans, way above base rate on mortgages. As soon as you need some help they close their doors.

 

[StaffsWCML]

So you think the government should lend money to a Chinese company who will then probably make a significant number of the employees redundant anyway?

Fosun were not planning any major redundancy programs. They wanted to recapitalise the business, renegotiate its debts in swaps for equity. The banks were refusing to deal as there obviously wasnt enough profit in it for them.

It will cost the government a lot in redundancy, pensions liability, benefits payments etc.

The irony is the scum bank that would not agree is RBS. The very same RBS that were bailed out to the tune of £45.5 billion. That rotten business should have been allowed to fail, but still carries on causing misery.

In recent years they have been the cause of a lot of failing businesses, withdrawing or refusing to renegotiate their terms.

 

[Tetchytyke]

The fact that that step has been skipped should tell people quite a lot about the state of the underlying business...

Yep, the business is gone. It's not the first time Thomas Cook have been here- they were days away from bankruptcy in 2011- which is the other problem. They've not dealt with the underlying debt.

The other questions are if Thomas Cook own very little then what is it they actually owe

Money for the two leveraged takeovers- in 2001 when the Germans bought Thomas Cook and 2008 when they merged with MyTravel (Airtours).

 

[ainsworth74]

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

Oh will it? I remembered from my training that the NI fund will cover redundancy payments but it's been so long I'd forgotten what else it covered! Employment was never my best area anyway

 

[Tetchytyke]

the banking system is still built significantly on confidence - break that and things get very ugly, very fast.

Indeed, but we had most of those issues anyway. RBS should have been left to go bust.

 

[Tetchytyke]

I remembered from my training that the NI fund will cover redundancy payments

Unpaid wages too, up to a limit. It won't pay for other stuff, such as repatriation costs, though. And if Thomas Cook reps weren't on the UK payroll it could get very messy very quickly for them.

 

[ainsworth74]

And if Thomas Cook reps weren't on the UK payroll it could get very messy very quickly for them.

Yes I must admit they're the ones that I'm actively slightly worried for. The staff in the UK it's obviously horrible to from being employed yesterday to unemployed today and equally for those who have holidays booked or are on holiday it's also horrible. But for the Reps who are overseas? They seem like they could easily be stranded or at least significantly out of pocket along with being out of a job!

 

[cactustwirly]

Unpaid wages too, up to a limit. It won't pay for other stuff, such as repatriation costs, though. And if Thomas Cook reps weren't on the UK payroll it could get very messy very quickly for them.

I imagine that the reps were on a local payroll (ie Spanish) being paid in Euros rather than pounds.
I know TUI reps get paid in Euros each month.

 

[StaffsWCML]

Yep, the business is gone. It's not the first time Thomas Cook have been here- they were days away from bankruptcy in 2011- which is the other problem. They've not dealt with the underlying debt.

Money for the two leveraged takeovers- in 2001 when the Germans bought Thomas Cook and 2008 when they merged with MyTravel (Airtours).

Banks making supplying imaginary risky made up money to buy stuff that is artificially inflated so they can benefit from fees and charges ten throwing their toys out of the pram when they don't like it anymore.

I would have some sympathy if it was a well run business that didn't require a bail out itself! But RBS should be bottom of any queue.

 

[cactustwirly]

Yes I must admit they're the ones that I'm actively slightly worried for. The staff in the UK it's obviously horrible to from being employed yesterday to unemployed today and equally for those who have holidays booked or are on holiday it's also horrible. But for the Reps who are overseas? They seem like they could easily be stranded or at least significantly out of pocket along with being out of a job!

The reps are usually on a fixed term temporary contract, I imagine they would have only had a month's worth of work left anyway if that.

 

[cactustwirly]

If the government Guarantees certain aspects critical to the function of the economy. I don't really see the issue if for example RBS goes its just another business badly run.

They basically bailed them out and allowed them to continue their gambling.

They were not throwing good money after bad its more a bridging loans till takeover, there was a good take over offer on the table from Fosun but the banks as usual were being greedy probably to fund their bonus pots. The other questions are if Thomas Cook own very little then what is it they actually owe, its old made up money by the banking institutions and they are the one who can decide to pull the plug. They will get a percentage of their money back as they are priority creditors, more than they deserve, already on top of interest and charges they have accrued which probably outweighs the original loans. Really banks are absolute scum.

Obviously we have a huge problem here as most of our economy relies on banks in the City but they are vile institutions who profit out of business and individuals in financial distress. There should be a limit on the interest rates they can charge, and they should be forced to tie it more closely to the base rate which means nothing now. These scumbags will happily charge 20% interest of Credit Card, 5-20% on loans, way above base rate on mortgages. As soon as you need some help they close their doors.

The point is that we're only in September, all the money that Thomas Cook make from the year, comes in July and August.
The fact that they need loans after what should have been the most profitable 2 months is very worrying indeed

 

[Bletchleyite]

The reps are usually on a fixed term temporary contract, I imagine they would have only had a month's worth of work left anyway if that.

I don't know about TC specifically, but reps are often self-employed anyway. The ones on more adventurous tour-type holidays very often work for more than one firm, though live-in reps would I guess be a bit different.

 

[cactustwirly]

I don't know about TC specifically, but reps are often self-employed anyway. The ones on more adventurous tour-type holidays very often work for more than one firm, though live-in reps would I guess be a bit different.

No they are not!
They would be directly employed by Thomas Cook, who will also pay for accommodation and flights as part of the deal.

 

[StaffsWCML]

The point is that we're only in September, all the money that Thomas Cook make from the year, comes in July and August.
The fact that they need loans after what should have been the most profitable 2 months is very worrying indeed

Its worrying but there was a rescue deal in from Fosun on the table. RBS decided to block it because they would probably not make as much profit that way.

At least these scumbags should be ok

https://www.bloomberg.com/news/arti...nt=business&cmpid=socialflow-twitter-business

 

[cactustwirly]

Its worrying but there was a rescue deal in from Fosun on the table. RBS decided to block it because they would probably not make as much profit that way.

At least these scumbags should be ok

https://www.bloomberg.com/news/arti...nt=business&cmpid=socialflow-twitter-business

The Fosun deal may not have worked, how long until Thomas Cook needed another bailout?
Maybe RBS saw that TC was toast, and realised that the £200M they were going to put in would just be swallowed up.

 

[StaffsWCML]

The Fosun deal may not have worked, how long until Thomas Cook needed another bailout?
Maybe RBS saw that TC was toast, and realised that the £200M they were going to put in would just be swallowed up.

If Fosun had injected the capital required (they made a 1 billion profit last year), there is no reason it should fail. The business was profitable a few years ago, its only because it is saddled with unsustainable debt at unrealistic rates. They sold c £9billion of holidays last year. Now a huge gap in the market place, less flight spaces and less competition.

RBS should have also been Toast. £45 billion and how many years of losses? I don't think anyone at RBS is in a position to make a judgement. I think more often than not bankers and bankers profit too much out of this kind of situation and it should be stopped. I also see Thomas Cook executives took £30million out of the business in bonuses in recent years .

 

[Bletchleyite]

I don't think anyone at RBS is in a position to make a judgement

Well, they kind of have to, unless they want to fail again due to poor investment decisions?

 

[Meerkat]

Its worrying but there was a rescue deal in from Fosun on the table. RBS decided to block it because they would probably not make as much profit that way.

At least these scumbags should be ok

https://www.bloomberg.com/news/arti...nt=business&cmpid=socialflow-twitter-business

Not sure there is any point debating with you as your angry language signals a pretty closed mind, but I would point out that if someone is making big money out of CDSs then they are taking that off other investors/speculators/gamblers (delete to match bias) who are losing money.

Blocking a rescue crystallises major losses for the banks on their current loans. They wouldn’t do that if they thought there was a realistic chance of keeping TC alive to repay more.

 

[StaffsWCML]

Not sure there is any point debating with you as your angry language signals a pretty closed mind, but I would point out that if someone is making big money out of CDSs then they are taking that off other investors/speculators/gamblers (delete to match bias) who are losing money.

Blocking a rescue crystallises major losses for the banks on their current loans. They wouldn’t do that if they thought there was a realistic chance of keeping TC alive to repay more.

I apologise for appearing angry but I do not have much time for banks or bankers.

Obviously we will never know exactly what kind of dodgy tactics these bankers are up to. I very much doubt they are losing out significantly overall, when you think of the interest, charges and fees they have already made, I wouldn't feel too sorry for the bank.

This will have been done to keep their bottom line and maximise bonus payments. I would suspect that Thomas Cook tried to renegotiate a lower interest rate. Banks frequently employ this kind of tactic either leaving you trapped at what they want you to pay or going down an insolvency route because its not sustainable. The crazy thing is they would probably make more money by being more understanding.

 

[wireforever]

Grant Snafu transport secretary says on tv TC holidaymakers don't worry we have plans in place to get you home stay by the pool ! .He needs to but the RAF on standby and insure the holidaymakers in Tunisia can leave their hotels to catch their planes home.

 

[Meerkat]

I very much doubt they are losing out significantly overall, when you think of the interest, charges and fees they have already made, I wouldn't feel too sorry for the bank.

If lending money is so outrageously profitable why would they pull the plug, rather than lend even more money?
Surely your anger should be directed at those who borrowed the money rather than those who lent it?

 

[StaffsWCML]

If lending money is so outrageously profitable why would they pull the plug, rather than lend even more money?
Surely your anger should be directed at those who borrowed the money rather than those who lent it?

Because they wanted to renegotiate the deal to one less profitable for the banks, the banks wanted to milk as much as they could so were trying to get more in the hope someone would step in and underwrite the extra £200 million, they do this all the time.

Business will borrow money if the banks are offering it, perhaps they should have been asking more questions when the debt was loaded into the company back in the 2000s.

The banks have to bare some responsibility here, they never seem to be held accountable. Yes Thomas Cook has been badly managed for years and hasn't modernised as much as it should. The bankers have also played their part with greed as they always do.

The real people suffering here are the staff who lost their jobs and the people who's holidays are ruined. Forgive me for not sympathising with RBS here, who carry on as normal despite being insolvent back in 2008.

 

[Tetchytyke]

Well, they kind of have to, unless they want to fail again due to poor investment decisions?

@StaffsWCML makes a valid point about banks profiting more from liquidation than keeping a business running and paying off debt. Noel Edmonds (for it is he) has gained a LOT of compensation from Lloyds because they did it to him. The back pages of Private Eye are full of it. It's so dodgy.

Business loans don't work in the same way as domestic loans. And a mate of mine, at RBS in the height of the insanity, has told me a tale or two.