22,000 jobs at risk as Thomas Cook collapses

Thomas Cook has collapsed, leaving 22,000 jobs worldwide at risk and 150,000 British holidaymakers stranded abroad.

Talks to save the 178 year-old firm, which was set up by Thomas Cook, a cabinet-maker, in 1841 to transport temperance supporters by railway collapsed last night (22 September).

The firm employed 3,000 people in Manchester and operated its airline out of the city.

Thomas Cook Airlines had a fleet of over 100 aircraft and employed 2,500 staff.

Manchester online retailer On the Beach Group expects to take a hit from the collapse.

On the Beach said it is supporting customers that are currently on holiday and whose travel plans will be affected.

The firm expects that there will be a one-off exceptional cost associated with helping customers to organise alternative travel arrangements, and lost margin on cancelled bookings.

On the Beach expects to be able to recover the costs of the cancelled flights via chargeback claim – as was the case for the Monarch failure in 2017.

The one-off exceptional will be booked in the current financial year.

The board is currently evaluating the potential effects of the failure on its forecasted performance for the year ending 30 September 2020.

Cheshire specialist Travel Counsellors has set up a dedicated Freephone number and e-mail address for any travellers affected by the collapse.

People can call 0800 061 2155 or email thomascookhelp@travelcounsellors.com which will connect them to the company’s head office helpdesk.

UK Managing Director and CCO Kirsten Hughes, said: “Following the unfortunate collapse of the Thomas Cook Group our priority is to ensure our customers, both in resort and due to travel, are looked after.

“We became concerned of a potential failure last week and a crisis team at head office guaranteed we were prepared to support our Travel Counsellors and customers if and when the news hit.

“Our 24/7 duty office had already run reports to identify affected bookings and we have been in constant contact with our Travel Counsellors to support them.

“ Whilst the subject of how a customer is financially protected can be complex, we are keen to reassure our customers that their bookings are protected.

“We are also here to offer advice to the Thomas Cook staff who will unfortunately be facing an uncertain future at this time, and would urge these people to get in touch with our careers team to chat about their options (email careers@travelcounsellors.com or call 0161 464 5243).”

Transport Secretary Grant Shapps has announced that the government and UK Civil Aviation Authority (CAA) has hired dozens of charter planes to fly customers home free of charge.

All customers currently abroad with Thomas Cook who are booked to return to the UK over the next two weeks will be brought home “as close as possible” to their booked return date, says the Government.

The flights will start operating from today 23 September.

Customers are being “strongly advised” not to cut short their holiday or go to the airport without checking the website for information about their return journey.

The UK CAA is also contacting hotels accommodating Thomas Cook customers, who have booked as part of a package, to tell them that the cost of their accommodation will also be covered by the government, through the Air Travel Trust Fund/ATOL cover.

Hundreds of staff from many government departments and agencies, including the UK CAA, the Department for Transport (DfT), and the Foreign Office (FCO), will be deployed in call centres and at airports to help people.

Mr Shapps, said: “Thomas Cook’s collapse is very sad news for staff and holidaymakers. The government and UK CAA is working round the clock to help people. Our contingency planning has helped acquire planes from across the world – some from as far away as Malaysia – and we have put hundreds of people in call centres and at airports.

“But the task is enormous, the biggest peacetime repatriation in UK history. So, there are bound to be problems and delays. Please try to be understanding with the staff who are trying to assist in what is likely to be a very difficult time for them as well.”

Business Secretary Andrea Leadsom said: “This will be a hugely worrying time for employees of Thomas Cook, as well as their customers. Government will do all it can to support them. I will be setting up a cross-government taskforce to monitor local impacts, will write to insurance companies to ask them to process claims quickly, and stand ready to provide assistance and advice.

“I will also be writing to the Insolvency Service to ask them to prioritise and fast-track their investigation into the circumstances surrounding Thomas Cook going into liquidation.”

The government has held a series of meetings to plan the operation, which is codenamed Operation Matterhorn. Further ministerial meetings will be held today.

The operation is led by the UK CAA but also involves DfT, FCO, the Department for Business, Energy and Industrial Strategy (BEIS), the Department for Work and Pensions (DWP), and other departments.

The operation is modelled on the successful repatriation of passengers after the collapse of Monarch Airways. The final cost of that operation to taxpayers was about £50m. The repatriation effort with Thomas Cook is about twice the size.

A Government statement said: “Thomas Cook’s financial problems are substantial, long-standing and well documented and government financial assistance would not have resolved them.”

Peter Fankhauser, chief executive of Thomas Cook, said: “We have worked exhaustively in the past few days to resolve the outstanding issues on an agreement to secure Thomas Cook’s future for its employees, customers and suppliers. Although a deal had been largely agreed, an additional facility requested in the last few days of negotiations presented a challenge that ultimately proved insurmountable.

“It is a matter of profound regret to me and the rest of the board that we were not successful. I would like to apologise to our millions of customers, and thousands of employees, suppliers and partners who have supported us for many years. Despite huge uncertainty over recent weeks, our teams continued to put customers first, showing why Thomas Cook is one of the best-loved brands in travel.

“Generations of customers entrusted their family holiday to Thomas Cook because our people kept our customers at the heart of the business and maintained our founder’s spirit of innovation.

“This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world.”

Russ Mould, investment director at Manchester investment platform, AJ Bell, said: “The demise of Thomas Cook is a sad day on many accounts.

“Lots of people who have booked months in advance will have found their holidays are now cancelled. Thousands of people who work for Thomas Cook will have, unfortunately, lost their jobs.

“Hundreds of Thomas Cook stores will now be shut, adding to the woes depressing the high street; and investors owning Thomas Cook shares will have lost everything.

“Ultimately Thomas Cook failed because it didn’t have the cash flow to reinvent itself to fight off growing competition as so much money was going on debt repayments.

“It struggled with very thin profit margins, high levels of competition, rising fuel prices and large borrowings. It also had expensive stores on the high street to maintain and leasing fees on aircraft to keep paying.

“Despite having 22 million customers, the business only made £250m underlying earnings before interest and tax which equates to about £11 a customer. That’s barely anything given the amount of effort involved to run its business and market its holidays.

“A weak pound and concerns about the impact of Brexit on consumer finances and the economy have resulted in many consumers holding off from booking holidays, plus there has been a growing trend for staycations where people holiday in the UK.”

Travel and tourism expert Dr Neil Robinson, from the University of Salford Business School, said: “The events of the last 24 hours shows us the vulnerability of the aviation/travel sectors.

“Mr Cook would be turning in his grave. A lad from Derbyshire who went on to create one of the world’s most recognisable travel brands, which now lies in financial ruin.

“These are very sad times and my heart goes out to employees and customers alike.

“So where did it all go wrong? The downturn in bookings post the Arab spring back in 2010, saw profits drop as people were reluctant to buy travel product associated with this region and the seeds of change for Thomas Cook and the wider travel sector were already being sown.

“Fast forward a few years and the sector has come under many pressures associated with very slim profit margins for each travel product sold, a possibility of too many players in an already saturated market and one might argue that the product mix on offer at Thomas Cook did not align with what its customers really wanted. Their price, promotion and how people actually booked Thomas Cook holidays did not keep pace with changing technology and demand, for example they still had a lot of high street outlets, which incur rental and other costs.

“Thomas Cook’s financial strength has not looked good over recent months, with share prices falling, senior managers leaving and would-be bail out loans not materialising, all adding to the creation of a perfect storm.”