Sad to see Thomas Cook become the latest British business to cease trading as crisis talks failed the reach a suitable outcome by 2 am this morning. Now the largest peacetime repatriation will begin, with the government (and the taxpayer’s purse) tasked with getting 150,000 British holidaymakers back to the UK. Support from Easyjet and Virgin will help;  flights have been brought in from as far afield as Malaysia.
It’s hard to believe the stalwart UK travel operator was formed in Market Harborough, Leicestershire during the early Victorian era. It was 1841 when local businessman, Thomas Cook, began organising railways outings for members of the local temperance movement. Now with 178 years trading under its belt, annual sales of £9 billion, 19 million customers and 22,000 staff operating in 16 countries – we look at what went wrong at Thomas Cook.
There were several factors that had a detrimental effect on the firm’s fortunes - financial, social and even meteorological.
Over the past three years, we have seen more British holidaymakers opting to forgo the European, taking advantage of UK heatwaves. Together with the increased competition of low-cost online travel deals and budget airlines, Brexit was also cited as the reason many holidaymakers were putting holiday plans on hold.
Also, many holidaymakers have become savvier in putting together their own holidays and applying a more bespoke flexible approach – not opting for the ‘package deals’ that Thomas Cook excelled at.
A loss of £1.5 billion was reported in May 2019, with the forecast for the remainder of the year looking as bleak. Attempts were made to revitalise the finances; Thomas Cook put its airline up for sale and announced it was holding ‘advanced talks’ with its banks and largest shareholder – Fosun - hoping to secure a deal of £200 million to save the business. It came close but an agreement was needed by 2 am this morning (when most Thomas Cook flights were on the ground).
To some observers, this looks to have happened quickly – following the pattern of other UK high street businesses (Jamies’ Italian, Patisserie Valerie, British Steel) but the company came very close to insolvency eight years ago before being given an 11th-hour reprieve from a group of banks. (Ironically, the lifeline that saved them then was from the Royal Bank of Scotland whose demand for £200 million was the final nail in Thomas Cook’s coffin this time around)
We can’t ignore that Thomas Cook was trying to balance the books with too much debt – figures suggest this could be as high as £2bn.
As the repatriation of Thomas Cook holidaymakers to the UK begins – which is expected to take two weeks to complete - Peter Fankhauser, Thomas Cook's chief executive, said the tour operator's demise was a "matter of profound regret", apologising to those affected.
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