Thomas Cook collapse: What happened and what's next

It must be noted that Thomas Cook India will be unaffected by the UK arm folding.
Thomas Cook collapse: What happened and what's next
Thomas Cook collapse: What happened and what's next
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Travel company Thomas Cook collapsed on Monday after final efforts to save the company failed. The 178-year-old company announced that it ceased trading with immediate effect, and that it would no longer be operational. With this, all bookings of the company were cancelled, leaving more than a lakh tourists stranded around the world.

One of the world's best-known holiday brands, the business was founded in 1841 in Leicestershire by cabinet-maker Thomas Cook. The tour operator's failure puts 22,000 jobs at risk worldwide, including 9,000 in the UK.

However, it must be noted that Thomas Cook India will be unaffected by the UK arm folding. This is because a majority stake in Thomas Cook India — 77% — is actually owned by Fairfax Financial Holdings, a company based in Canada.

In May, Thomas Cook announced a net debt of 1.25 million pounds, and posted that it had a loss of 1.5 billion pounds. It also issued a profit warning, which is a warning issued by a company telling the stock market that the company will not make as much profit.

The company’s position was further worsened by online rivals, according to the Guardian.

Peter Fankhauser, the CEO of Thomas Cook, then said, “There is now little doubt that the Brexit process has led many UK customers to delay their holiday plans for this summer.” Apart from Brexit, he also attributed the heatwave to people choosing to travel less.

The company was also struggling under high fuel costs as part of the airlines it had and the costs for the hotels it had tie-ups with.

Thomas Cook was in a similar situation in 2011, when its debt reached 1.1 billion pounds and it took cash then to save itself, only adding on more debt in the process.

In 2015, Fosun International, a Chinese company, bought a stake in the company.

Following 2019's loss announcement and profit warning, the company required a bailout.

In August, the company announced a restructuring -- when a company changes the way it internally works, how the company functions or its structure, and the measures it takes to limit harm to the business.

As part of this, Thomas Cook was in talks for a 900 million pound rescue plan, as it had to pay the hotels for the summer, and since it would also see less business in the winter. 450 million pounds of this would be given by Fosun, and in return, it would receive 75% of the Thomas Cook’s business and 25% of the company’s airline. The other 450 million pounds would come from banks and persons holding bonds in the company. According to the Guardian, the deal required banks to write off the debt. Also, it was possible that under the new owners, the public company could be private again.

However, Thomas Cook then needed an additional 200 million pounds, which wrecked the deal it already had. To secure these 200 million pounds, representatives of the company held multiple meetings on Sunday, but they failed, leading them to make Monday’s announcement.

The travel company even requested the UK government for 150 million pounds, which was rejected.

With all of the travel company’s bookings being cancelled, it has left 1.5 lakh people on holiday stranded. The Britain government now has to take on its largest repatriation operation, named ‘Operation Matterhorn’, to bring travellers back home.

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