Dubai: Thomas Cook is a household name in most places around the world. It has 178-year renown in the travel business.
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As a global brand, people equated Thomas Cook with the jet-set crowd. Its reach — with offices in most of the world’s capitals — and brand value was beyond reproach.
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Until Monday, that is — when it suddenly declared insolvency.
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As a last-ditch rescue operation collapsed, the travel giant represented another nail in the coffin of venerable firms biting the dust in the midst of digitsation of travel, a huge debt and political uncertainty.
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While some blame Brexit for Thomas Cook’s collapse, others point to more fundamental reasons: a disruption in the online travel marketplace.
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Here’s what we know about Thomas Cook:
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What is Thomas Cook?
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It is a British tour company, with a 178-year history.
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Before its official collapse on Monday, September 23, Thomas Cook was considered a “transparent” product.
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By Monday, however, its sudden collapse left hundreds of thousands of travelers stranded.
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Who was Thomas Cook?
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Thomas Cook (November 22, 1808 – July 18, 1892) was an English businessman. He is best known for founding the travel agency Thomas Cook & Son.
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At the age of 10, Cook started working as an assistant to a local market gardener for a wage of six pence a week. At the age of 14, he secured an apprenticeship with his uncle John Pegg, and spent five years as a cabinet maker.
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Cook’s idea to offer excursions came to him while “walking from Market Harborough to Leicester to attend a meeting of the Temperance Society”.
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With the opening of the extended Midland Counties Railway, he arranged to take a group of temperance campaigners from Leicester Campbell Street railway station to a teetotal rally in Loughborough, 11 miles away. On July 5, 1841, Thomas Cook escorted around 500 people, who paid one shilling each for the return train journey, on his first excursion.
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How many travelers are affected today?
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There are currently 600,000 travelers on vacation around the world with Thomas Cook, according to the British media.
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What about those with advance holiday bookings?
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There are believed to be up to 1 million people with advance holiday bookings using Thomas Cook’s platform.
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How did the collapse come about?
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Thomas Cook has been in business for 178 years.
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That long, illustrious history did not shield it from corporate implosion. The immediate cause was the its inability to secure a £200m lifeline from its bankers, including government-owned RBS. However, the tour operator’s woes go back much further.
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In 2007, it was a victim of a disastrous merger. Its debts ballooned. It’s a bit like the newspaper business. The internet revolution, the death of printed classified, and holiday bookings going digital have all contributed into making Thomas Cook as has-been in the industry it helped build.
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Is Thomas Cook a victim Brexit?
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Uncertainty surrounding Brexit is another reason. In May, the company told the British media that customers had been postponing their holiday plans, saying:
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“There is now little doubt that the Brexit process has led many UK customers to delay their holiday plans for this summer.”
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The slump in the value of the pound since the 2016 referendum won’t have helped either, as it makes foreign holidays more expensive.
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Earlier this month, political science professor Simon Hix said doubts over Brexit were a critical factor
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“Just wondering whether in time #ThomasCook will be seen as the first corporate victim of Brexit, as a critical factor, amongst many of course, was the collapse of the Pound against the Euro and Dollar,” he stated in a tweet.
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What is the British government doing about it?
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A huge repatriation effort has started after Thomas Cook ceased trading with immediate effect
###Advice to customers caught up in the Thomas Cook meltdown###
How are the lenders of Thomas Cook reacting to this?
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The Guardian’s Rob Davies has written about how Thomas Cook’s lenders pushed it over the edge by demanding an extra £200m ($248 million) of funding.
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Just three weeks ago, the tour operator looked to have secured a £900m ($1.12 billion) rescue package – half provided by Chinese tourism business Fosun, the rest by a mixture of banks and hedge funds.
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The debt-for-equity swap was aimed to wipe out of £1.7 billion ($2.11 billion) of loans. This would have allowed the firm pay interest during the barren winter, when less cash comes in because bookings are low.
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Then came “a bolt from the blue”, when a shock demand from its banks — including state-owned RBS — came, according to British media reports, quoting a person familiar with the talks.
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Thomas Cook was given a tough choice: find an extra $248 million, or the restructuring is dead. On Monday, it appears that the second option happened.
###What is the British government doing about it?###
What is the British government doing about it?
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The UK Civil Aviation Authority (CAA) says it had chartered 40 aircraft and taken seats on other airlines to bring holidaymakers home. Other carriers including British Airways and Virgin. The BBC estimates that the CAA will have brought at least 14,000 people home by the end of today.
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How are the customers coping?
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A Thomas Cook customer in Mahón, the capital of Menorca, due to fly back to Bristol on Monday morning — but the flight was cancelled. It’s the same horror story shared by hundreds thousands.
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But Britain’s CAA are on the case. CAA staff were at the airport by 7am to help passengers. The customer will be flown back to the UK on Monday in a chartered Titan flight, albeit six hours late.
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The CAA are “playing a blinder”, they say, being very efficient at handling the situation, according to a Guardian report.
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What about the customers of Thomas Cook Thomas (India) Group?
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Thomas Cook (India) Group is an entirely different entity. In August 2012, it was acquired by Fairfax Financial Holdings (Fairfax), a Canada0based multinational investment company.
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Following the transfer of its entire stake in Thomas Cook (India) Limited to Fairfax, Thomas Cook UK ceased to be the promoter of Thomas Cook (India) Limited. Since then, Thomas Cook UK has had no stake in Thomas Cook (India) Limited.
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“The last seven years have been fruitful as we continue to grow and build our legacy as an independent entity after Fairfax Financial Holdings acquired a 77 per cent stake in Thomas Cook India Ltd. (TCIL) in 2012,” Thomas Cook India said in a statement.
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