By GREGORY KATZ Associated Press Longtime British tour company Thomas Cook collapsed after failing to secure rescue funding, and travel bookings for its more than 600,000 global vacationers were canceled early Monday. The British government said the return of the firm’s 150,000 British customers now abroad would be the largest repatriation in its peacetime history. The process began Monday and officials warned that delays are inevitable.
The Civil Aviation Authority said Thomas Cook has ceased trading, its four airlines will be grounded, and its 21,000 employees in 16 countries, including 9,000 in the UK, will lose their jobs. The company several months ago had blamed a slowdown in bookings because of Brexit uncertainty for contributing to its crushing debt burden. The 178-year-old company had said Friday it was seeking 200 million pounds ($250 million) to avoid going bust and was in weekend talks with shareholders and creditors to stave off failure.
The prominent firm, whose airliners were a familiar sight in many parts of the world, also operated around 600 UK travel stores. The company’s chief executive, Peter Fankhauser said, “This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world.” He said a deal had been “largely agreed” but that “an additional facility” requested in the last few days presented an insurmountable challenge but provided no further details. “I would like to apologize to our millions of customers, and thousands of employees,” he said in a statement. Britain’s CAA said it had arranged an aircraft fleet for the complex British repatriation effort, which is expected to last two weeks.
“Due to the significant scale of the situation, some disruption is inevitable, but the Civil Aviation Authority will endeavor to get people home as close as possible to their planned dates,” the aviation authority said in a statement. Describing the repatriation plan, British Transport Secretary Grant Shapps said dozens of charter planes, from as far afield as Malaysia, had been hired to fly customers home free of charge. He said hundreds of people were staffing call centers and airport operations centers. “The task is enormous, the biggest peacetime repatriation in UK history. So there are bound to be problems and delays,” he said.
A website set up by the aviation authority to aid the firm’s customers crashed shortly after the company collapse was announced. Unions representing the Thomas Cook staff had urged the British government to intervene to prop up Thomas Cook to protect jobs and the traveling public. British Prime Minister Boris Johnson said the government was right not to bail out the company, arguing that travel firms should do more to ensure they don’t collapse. Johnson said the government would help repatriate the 150,000 stranded British travelers. But he said bailing out the company would have established “a moral hazard” because other firms might later expect the same treatment. “We need to look at ways in which tour operators one way or another can protect themselves from such bankruptcies in future,” Johnson said.
“One is driven to reflect on whether the directors of these companies are properly incentivized to sort such matters out.” Most of Thomas Cook’s British customers are protected by the government-run travel insurance program, which makes sure vacationers can get home if a British-based tour operator fails while they are abroad. Thomas Cook, which began in 1841 with a one-day train excursion in England and now operates in 16 countries, has been struggling over the past few years. It only recently raised 900 million pounds ($1.12 billion), including receiving money from leading Chinese shareholder Fosun. An estimated 1 million future travelers will find their bookings for upcoming holidays cancelled.
They are likely to receive refunds under the terms of the government’s travel insurance plan. Officials plan to post details on how to receive refunds later on Monday. Travelers holding reservations with Thomas Cook were told not to go to the airport because all flights had been cancelled. An earlier repatriation plan following the 2017 collapse of Monarch Airlines cost the government about 60 million pounds. The Thomas Cook effort is much larger and likely to be far more costly. In May, the company reported a debt burden of 1.25 billion pounds and cautioned that political uncertainty related to Britain’s scheduled departure from the European Union at the end of October had hurt demand for summer holiday travel.
Heat waves over the past couple of summers in Europe have also led many people to stay at home, while higher fuel and hotel costs have weighed on the travel business. The company’s troubles were already affecting those traveling under the Thomas Cook banner. A British vacationer told BBC radio on Sunday that the Les Orangers beach resort in the Tunisian town of Hammamet, near Tunis, demanded that guests who were about to leave pay extra money for fear it wouldn’t be paid what it is owed by Thomas Cook.
Ryan Farmer, of Leicestershire, said many tourists refused the demand, since they had already paid Thomas Cook, so security guards shut the hotel’s gates and “were not allowing anyone to leave.” It was like “being held hostage,” said Farmer, who is due to leave Tuesday. He said he would also refuse to pay if the hotel asked him.
The Associated Press called the hotel, as well as the British Embassy in Tunis, but no officials or managers were available for comment.
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