This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2019/09/23/world/europe/thomas-cook-stranded.html

The article has changed 16 times. There is an RSS feed of changes available.

Version 10 Version 11
Thomas Cook, World’s Oldest Travel Company, Collapses Thomas Cook, World’s Oldest Travel Company, Collapses
(about 2 hours later)
LONDON — The tour operator and airline Thomas Cook said on Monday that it had collapsed, forcing hundreds of thousands of travelers to scramble to find a way home, after last-minute negotiations to obtain necessary financing for the debt-ridden company fell apart. LONDON — Hundreds of thousands of vacationers were left stranded when one of the world’s oldest tour companies, Thomas Cook, abruptly announced Monday, with some of its flights still in the air, that it was going out of business.
“We are sorry to announce that Thomas Cook has ceased trading with immediate effect,” the company said in a post on Twitter, and the Civil Aviation Authority in Britain said that all Thomas Cook bookings, including flights and vacations, had been canceled, affecting an estimated 600,000 people around the world. Amid scenes of confusion at airports in European vacation spots, British aviation officials scrambled to stitch together a plan to bring home 150,000 travelers — the largest peacetime repatriation in the country’s history.
The liquidation of the world’s oldest travel company, which specialized in low-cost package vacations that included flights and accommodation in more than 60 destinations around the world, has set in motion what was being described as the biggest peacetime repatriation in British history, as the government announced plans to bring back 150,000 Britons. The company, which opened for business in 1841, said that all its bookings, including flights operated directly by the company, had been canceled. “We are sorry to announce that Thomas Cook has ceased trading with immediate effect,” the company said.
The Civil Aviation Authority said that the first repatriation flight had left from Kennedy Airport in New York with more than 300 passengers on board and was expected to land at about 5 p.m. in London. The jarring news snarled travel plans for hundreds of thousands as tourism officials braced for a potentially devastating hit to their economies.
Thomas Cook was struggling with debts approaching £2 billion, forcing it to enter negotiations with shareholders and creditors that came at least £200 million short of what was needed to keep the company running. With no other choice, the company ceased operations. Many of the travelers were abroad, and wondering how they would get home. Others found their vacation plans dashed.
Before the collapse, Prime Minister Boris Johnson said the government would not intervene to save the airline, adding that doing so would create a “moral hazard” because the possibility of a government bailout could encourage other companies to take risks. Among them were Layton Roche and Natalie Wells, who booked flights more than a year ago from Manchester, England, to Kos, a Greek island, for their wedding this Friday.
Condor, an airline that is a subsidiary of Thomas Cook, said it was seeking financial help from the German government to keep its planes in the air after the collapse of the company, which impacted around 140,000 German travelers. “I have been awake for 28 hours now,” Mr. Roche, a 30-year-old civil engineer, said in a message on Monday, as he and Ms. Wells, 31, were on their way to Birmingham to seek an alternative flight.
Condor said that it had been “profitable for many years” and that a loan from the German government would help it fly back those German travelers who were scheduled to fly with Condor anyway. Those Germans who flew with other Thomas Cook affiliates will also be covered by the insurance mandatory for operators of package tours. The Britons stranded on holidays were among as many as 600,000 vacationers left high and dry worldwide. Britain’s Civil Aviation Authority said in a statement on its website that it had arranged 60 flights to get people home on Monday, and that the effort would extend until Oct. 6.
The Civil Aviation Authority said it was working with the government to support passengers scheduled to fly back to Britain with Thomas Cook between Monday and Oct. 6, the agency said in a statement on its website, though the transport secretary, Grant Shapps, cautioned that what is known as “Operation Matterhorn” would not “be entirely smooth sailing.” “We will try our level best to get them home,” said Prime Minister Boris Johnson. “There will be plans ready to deal with that if it is necessary.”
The BBC reported that the government had chartered 45 jets to get people home. Airlines including easyJet, British Airways and Virgin were providing planes, the BBC said, with some being flown in from as far away as Malaysia. If Thomas Cook’s customers were surprised, British officials had less reason to be. The government had refused to mount a financial rescue of the battered company; doing so, Mr. Johnson said, would create a “moral hazard” by encouraging other troubled companies to take undue risks.
The aviation authority told passengers who were booked on Thomas Cook Airlines flights not to go to British airports, “as your flight will not be operating,” and warned that the repatriation effort would not include any outbound flights from Britain. It was unclear, however, what steps, if any, the government took to prepare for the possibility of hordes of stranded travelers.
It also noted that it had contacted the hotels hosting Thomas Cook customers, who booked their accommodation as part of a package, to tell them that the cost of their stay will also be covered by the government. The announcement alleviated fears that travelers would be unable to leave their hotels until payment was settled. Tremors from the collapse radiated across the world, to Malaysia and San Francisco, but were felt most acutely in Europe. In Greece, where 50,000 vacationers were expected to be repatriated to their home countries in the coming days, and in Spain, there were fears about the effects on their critical tourist industries.
On Saturday, some British tourists described being stopped from checking out of their hotel in Tunisia over concerns the hotel might not be paid. In Crete, alone, the tour company brought 400,000 visitors this year. Michalis Vlatakis, the head of the Greek island’s union of tour operators, described its collapse as a “7-magnitude earthquake.”
The effects of the collapse will ripple out far from Britain, the headquarters of Thomas Cook. In Greece, where 50,000 vacationers are expected to be repatriated to their home countries in the coming days, there are fears about the effect of the company’s collapse on the local economy. Things were at least as dire in Spain, particularly in the Canary Islands and the Balearic archipelago. Together, they accounted for about 3.2 million of the 3.6 million passengers flying each year to Spain on planes owned or chartered by Thomas Cook, according to the Spanish National Airport Authority.
Michalis Vlatakis, the head of Crete’s union of tour operators, described the developments as a “7-magnitude earthquake,” adding that the local tourism sector was now “waiting for the tsunami.” Beyond the chaos and disappointment for travelers, the company’s collapse put 21,000 jobs at risk.
About 70 percent of tour operators on Crete have contracts with Thomas Cook, he said, adding that so far this year the British company brought 400,000 visitors to the island, and other islands that are even more reliant on tourism. In a sense, the collapse of Thomas Cook signaled the end of an era, in which the company’s low-cost package holidays put beach vacations in exotic locales within the budgets of middle-income Britons.
Layton Roche and Natalie Wells booked flights more than a year ago from Manchester to Kos, a Greek island, for their Friday wedding, and they said they had been forced to improvise after the collapse turned their plans into chaos. The 178-year-old travel company had been in poor financial health for some time. It announced its closing after negotiations to obtain £200 million pounds, or $250 million, in emergency financing fell apart over the weekend.
“I have been awake for 28 hours now,” Mr. Roche, a 30-year-old civil engineer, said in a message on Monday, while he and Ms. Wells, 31, were on their way to Birmingham to find an alternative flight. Analysts said Thomas Cook, struggling with a debt pile approaching 2 billion pounds — nearly $2.5 billion — had failed to adjust to the changing times. While other travel companies went totally online, for instance, Thomas Cook held onto its extensive chain of storefronts.
The couple had already paid about 4,000 pounds, or about $5,000, for alternative flights for themselves and some family members, and they were expecting to spend another £2,000 for their accommodation. “What everybody is not lending their thoughts to is that this has been a thoroughly badly run company,” David Buik, a financial analyst, said in an interview with LBC radio on Monday. “It has had far too many shops. The emphasis of the business has gone online.”
“I’m absolutely gutted,” Mr. Roche said, adding that around 80 percent of the guests would not be able to make it because of the extra costs. But the company also suffered from a number of factors beyond its control, particularly Brexit, the planned British withdrawal from the European Union, which has cut the value of the pound. That has discouraged travel and squeezed profits.
Mr. Roche said he expected a wait of at least three months before being able to claim money through the Air Travel Organizer’s License, a program that protects most package vacations sold by travel businesses based in Britain. “If the majority of your business is in destinations which are in euros and you are against the backdrop where there is a lot of capacity and you cannot raise prices, then there is a cost squeeze,” Chris Tarry, an independent airline analyst, told the BBC.
The failure of Thomas Cook touched off a debate in Britain over whether the government should have intervened to prevent the collapse. Speaking to the British television network ITV, Mr. Shapps, the transport secretary, said that beyond the fact that “governments don’t usually go around investing in travel companies,” a bailout of Thomas Cook would most likely have only put off the inevitable by “stretching things out for a couple of weeks.” Peter Fankhauser, the chief executive of Thomas Cook, said, “There is now little doubt that the Brexit process has led many U.K. customers to delay their holiday plans for this summer.”
“The company were asking for up to £250 million,” he said on “Good Morning Britain.” “They needed about £900 million on top of that, and they’ve got debts of £1.7 billion, so the idea of just spending taxpayers’ money on that just wasn’t really a goer.” Mr. Fankhauser also cited a prolonged heat wave in the summer of 2018 that brought high prices in the Canary Islands, a popular destination for the tour operator.
The company’s struggles have been building, and Thomas Cook warned that it had endured an especially difficult time in the six-month period ending in March. Terrorism and political unrest in North Africa, Turkey and Egypt have also hit the operator particularly hard in recent years, analysts said.
Peter Fankhauser, the chief executive of Thomas Cook, cited a prolonged heat wave in the summer of 2018 that brought high prices in the Canary Islands, a popular destination for the tour operator. Although 600,000 Thomas Cook customers were traveling when it announced that it was closing its doors, it was unclear how many were actually stranded. Some of the company’s local partners said they were still operating.
But he also noted that, “there is now little doubt that the Brexit process has led many U.K. customers to delay their holiday plans for this summer.” Condor, a German subsidiary airline of Thomas Cook, for example, was requesting a bridge loan from the German government and insisted that it would continue to serve the 240,000 of its customers — not all of them vacationers — currently out of the country.
The travel operator got its start in 1841, when a cabinet maker — and the man for whom the company is named — suggested a special route to carry temperance supporters from Leicester to a meeting in Loughborough, 12 miles away. Because Thomas Cook customers are covered under a government insurance program, they are assured of refunds for canceled trips and repatriation free of charge. Those who bought only flights from Thomas Cook do not have the same protections and may need to rely more on personal travel insurance, if they have it.
The company later expanded with trips to continental Europe and North America, and, according to its website, had sales of £7.8 billion and 19 million customers each year. The government insurance program also reimburses hotels for the cost of the customers’ stay, even if cut short. Some resorts, however, appear not to have gotten the message.
Visitors to the company’s website on Monday were greeted with a sparse gray screen with the company’s logo informing them of the collapse. “Thomas Cook UK Plc and associated UK entities have entered Compulsory Liquidation and are now under the control of the Official Receiver,” the website read, instructing customers to visit a special Civil Aviation Authority website that had been established. On Saturday, some British tourists described being stopped from checking out of their hotel in Tunisia over concerns the hotel might not be paid. They said they were essentially locked in until the matter was sorted out.
Most British travelers on package vacations should be able to get home without suffering any financial loss. British law requires that those trips be insured under the Air Travel Organizer’s License, which is intended to reimburse travelers if their tour operator stops doing business. But those who only bought flights from Thomas Cook do not have the same protections and will be more reliant on personal travel insurance. While the government may be covering the cost of canceled vacations, it is not helping out with the cost of making alternative arrangements.
Mr. Roche and Ms. Wells, the couple planning to marry, had to pay an extra 4,000 pounds, or about $5,000, for alternative flights for themselves and some family members. And they were expecting to spend another £2,000, or $2,500, for their accommodations.
“I’m absolutely gutted,” Mr. Roche said.
Most of the couple’s guests, he said, could no longer attend the wedding because of the extra costs.
The failure of Thomas Cook touched off a debate in Britain over whether the government should have intervened to prevent the collapse.
Speaking to the British television network ITV, Mr. Shapps, the transport secretary, said that beyond the fact that “governments don’t usually go around investing in travel companies,” a bailout of Thomas Cook would most likely have only put off the inevitable by “stretching things out for a couple of weeks.”
“The company were asking for up to £250 million,” he said on “Good Morning Britain,” the BBC’s a.m. news show. “They needed about £900 million on top of that, and they’ve got debts of £1.7 billion, so the idea of just spending taxpayers’ money on that just wasn’t really a goer.”
Mr. Buik, the financial analyst, agreed that the government was right not to step in, saying that the company had been “hanging on rags.”
Thomas Cook’s problems may prove a boon to other tour operators, particularly rival TUI, whose shares surged more than 8 percent in Monday trading.
Andrea Leadsom, the business secretary, said in a statement that the government intended to convene a task force to support the thousands of Thomas Cook employees who will lose their jobs.Andrea Leadsom, the business secretary, said in a statement that the government intended to convene a task force to support the thousands of Thomas Cook employees who will lose their jobs.
“This will be a hugely worrying time for employees of Thomas Cook, as well as their customers,” Ms. Leadsom said. “Government will do all it can to support them.”“This will be a hugely worrying time for employees of Thomas Cook, as well as their customers,” Ms. Leadsom said. “Government will do all it can to support them.”
The government also said that it would push to expedite an investigation into the circumstances around the company’s going into liquidation.
Two years ago, Monarch, another British carrier and tour operator, collapsed, leaving more than 100,000 passengers stranded abroad and forcing the government to step in to bring them home.