600,000 Thomas Cook customers are now stranded overseas after the UK-based travel company filed for insolvency yesterday. Around a quarter of these passengers are British holidaymakers.
The 178-year-old company operates airlines, resorts, hotels and cruises, and specialises in selling Europeans package holidays to sunny destinations. The Thomas Cook Group owns Thomas Cook Airlines, as well as Condor Flugdienst in Germany, which had a combined fleet of over 100 aircraft.
The debt-ridden company was forced to enter compulsory liquidation after eleventh-hour rescue talks with investors and shareholders fell through. The company had 22,000 employees worldwide.
Condor, which was part of the Thomas Cook Group, has applied for a bridge loan from the German government and is still operating… for now. It remains to be seen whether Condor will also be forced to eventually cease operations.
Fortunately for the affected British tourists, the UK government’s Air Travel Operator’s Licence (ATOL) scheme provides protections for customers that buy package holidays. UK tour operators are required to pay £2.50 (~$4.60) per passenger into an insurance fund, with the money used to protect customers that booked a holiday with a company that ceases trading – such as Thomas Cook, in this instance.
The UK government is now responsible for getting many thousands of British tourists home, in what has been described as the largest peacetime repatriation of British citizens in history. To do this, the UK government has charted dozens of aircraft including a Malaysia Airlines A380. Some customers will alternatively be offered free tickets on commercial flights. The repatriation flights will be running for the next two weeks.
The UK Civil Aviation Authority has set up a website with information for affected Thomas Cook customers.
With intense competition and rising fuel prices, it’s a difficult time to be an airline in Europe. Thomas Cook is just the latest in a series of European airlines to go bust, with French airline Aigle Azur going out of business just two weeks ago. XL Airways, another French carrier, yesterday suspended ticket sales and is also on the verge of collapse. And Iceland’s WOW Air went broke in March this year, although it has remarkably since found new investors and is returning to the skies.
In May 2019, Thomas Cook blamed Brexit uncertainty for a £1.5 billion (~$2.8 million) loss in the last financial year.
Meanwhile, Star Alliance member Adria Airways has temporarily suspended operations, cancelling all flights except its Ljubljana-Frankfurt route. The national carrier of Slovenia ran out of cash.
Join the discussion on the Australian Frequent Flyer forum: Thomas Cook Collapses
