Thomas Cook Collapses

[OATEK]

What I should have said, is what would a left wing government do to avoid a Thomas Cook disaster?

In Corbyn's case, there seems to be a preference to nationalise.

 

[RooFlyer]

What I was hinting at was airline and travel agency nationalisation

 

[dajop]

So how about you tell us how a left wing government would proceed?

One could mount all sorts of arguments on both sides, but I think these sorts of bankruptcies happen when both sides of the political spectrum are in power.

To indulge in a bit of humour for a moment, one could argue that the socialised losses would be much smaller under a left wing government, as excessive regulation would force them out of business much sooner

 

[travelislife]

I doubt that too many would even have any form of travel insurance. Is it that part of the market?

Travel Insurance rarely covers insolvency. Main recourse is if you have paid by credit card and can do a charge back for non delivery of the paid for service.

 

[Cruiser Elite]

So are some of you guys proud of yourselves? TC goes rrse over turkey and 600K peeps are impacted - 000’s Of peeps will lose their full time employment - and some here want to indulge in a pathetic petty L v R discussion - seriously?

 

[VulpesVulpes]

Very true. I’ve had a travel insurance policy for years, as it cover work travel, but I recently helped my son buy one, and I was amazed at just how little some of them covered.

So, perhaps it’s time for some form of regulation. You don’t leave, or arrive, in a country unless you have an adequate policy.

Travel Insurance rarely covers insolvency. Main recourse is if you have paid by credit card and can do a charge back for non delivery of the paid for service.

I am currently living in the UK and ex AU travel industry. The flagship travel insurance sold to customers in Oz does not cover insolvency in the retail policy but it does in the business policy (and staff discount policy which used the Business policy wording).

Over here in the UK it is often an optional extra, something I paid for when buying my annual policy over here.

In Oz, I was often covered by more than one policy. If you ignore work provided cover, I always had a good top of the line policy for "proverbial has hit the fan" and was always covered by an AMEX or other credit card policy that was always a little better at insolvency and personal effects cover.

As a bean counter with strong ties to the travel industry, this is a pretty sad day.

 

[cove]

Yes It is a very sad time for everyone involved. The customers, the staff, the suppliers and the landlords are all out of luck. Lots of hurt and I don’t see a winner other than the group of accountants and their lawyers handling the insolvency.
Getting travelers home is certainly a priority and I hope the British Government handle this properly.

 

[Must...Fly!]

A friend of mine was due to go on a TC holiday to Disneyland next month and had two other package holidays booked.

When I lived over there I must admit I never really understood the fascination with package holidays in general, never mind the obsession with Thomas Cook. An early post in the thread got it completely right - a British institution. Package holidays won't be going anywhere. But all those high street travel agents throughout the country...

 

[cove]

To crash like this means that they must have traded while they were insolvent. In Australia that would make the company directors of Thomas Cook liable for the company debts.i don’t know the English and European laws as to whether the laws there are similar to Australia.
So many spoiled holiday packages where folks were due to have their special holiday and now that is gone. I guess the folks who paid by credit card may be able to claim it back for not getting the deal they ordered. In that case the financial issuers of the credit card lose out.

 

[Pushka]

A shame such a business ran onto the rocks.

The government has chartered 45 jets to bring customers home and they will fly 64 routes today. The size of the fleet will make it temporarily the UK's fifth largest airline.

Thomas Cook collapses as last-ditch rescue talks fail

The tour firm's failure means more than 150,000 British tourists will need to be repatriated.

www.bbc.com

They earnt a lot of cash flow bonuses from their Travellers Cheques process where they would have, as I heard this morning, up to £150,000 pounds on their books until redeemed. They don’t seem to have adapted to the issues of the new means of managing cash overseas.

It is just awful for everyone, especially those with wedding packages. It will make people rethink about using Travel Agents I guess when funds don’t go directly to the provider.

 

[drron]

And I presume quite a few would have taken out personal loans for their travel.So financial institutions will forgive their loans? Wouldn't hold my breath.

 

[VulpesVulpes]

To crash like this means that they must have traded while they were insolvent.

....

Unfortunately trading while insolvent is nowhere near as black and white as it seems at face value.

A simplified version of events is TC needed £900m of credit and they had arranged that. However the supposed late addition to this negotiation was that TC needed to arrange a £200m working capital facility (think: bank overdraft) and the £900m was contingent on getting the £200m.

They may well have had the cash to continue operations plus service debt repayments into the future if they hit their targets and projections however if they get to Monday morning, like they did, when their debt obligations (the whole £900m) due without that rollover arranged AND continue to trade despite the fact they had the cash there to pay the days fuel bill that would be trading while insolvent.

That is a very simple explanation/example of a very complex situation. Obviously we can't be sure as not all these details are in the public domain.

Imagine having to reapply for your house mortgage every 12 months. 4 years in you change jobs only 80% of the salary but you've got a few months of payments saved up and your new lower salary still covers it. However now the bank says "no loan for you" then you're stuffed and your house is repossessed even though you could pay the mortgage.

 

[Pushka]

And I presume quite a few would have taken out personal loans for their travel.So financial institutions will forgive their loans? Wouldn't hold my breath.

I heard this morning of a couple who’d paid £80,000 for their wedding trip including all the relatives. Ok, that’s a huge amount to pay for a wedding but that isn’t the issue now.

 

[clipped_wings]

So very sad to hear this news. The thousands of travellers impacted by the collapse of TC is only the beginning. There are probably another thousand small business operators who are facing ruin through the loss of contracts etc. I am now scrambling for my travel docs to check the fine print.

I don't book package holidays because I like full control - I guess this scenario just proved a sad reality and a valuable lesson in today's world.

Cannot see the last 3 directors voluntarily handing back 35 million in collective bonuses. But they should all be prosecuted and banned from ever holding any job position over & above the fries counter at Maccas.

 

[nickfromeastryde]

I find it a tad unsavoury that the taxpayer has to bailout TC by chartering aircraft to repat the passengers. While an investor comes in later and buys the assets for a song.

There is a government run travel insurance program in place to get people home. It's funded by the travel industry I believe

 

[Andz]

Disgrace that shareholders can rip all the cash out the business, then debt ridden it with GP389 million, making the company unviable.

 

[33kft]

I don't book package holidays because I like full control - I guess this scenario just proved a sad reality and a valuable lesson in today's world.

In this case maybe, but I'm sure you'd find plenty of examples where a single leg of a non-packaged trip is missed due to some issue, invalidating the rest of the trip and perhaps not being covered by insurance due to it either being excluded, or the company finding a useful exclusion to apply to the situation.

I'm not sure advising the common person to book all travel themselves would result in greater success on average, this company did manage to survive for 178 years prior to collapse. If it was a lesson to learn, it was one that took an awfully long time to emerge.

 

[Quickstatus]

one could argue that the socialised losses would be much smaller under a left wing government,

The annual losses (socialised each financial year) will be multiyear. Eg AI, MH, SA.
So a collapse will seem smaller as the "brink from disaster" feel will be an annual event

 

[travelislife]

There is a government run travel insurance program in place to get people home. It's funded by the travel industry I believe

Except I think I read that fund had <20m pounds in it? Getting 600,000 people home and chartering 50 planes will cost a lot more than that, which the taxpayer is picking up.

 

[trooper]

And I presume quite a few would have taken out personal loans for their travel.So financial institutions will forgive their loans? Wouldn't hold my breath.

Can I ask why you think they should? There are plenty of comments on here decrying the fact that taxpayers money will be used to pay for repatriation... isn't it just as bad - or worse - to use (private) financial institutions funds to make people whole for something those institutions have no responsibility for?