As debt piles on, 178-year old travel provider collapsed on Monday after failed talks with creditors.
On Monday, Thomas Cook PLC's collapse left thousands of holidaymakers stranded around the world, forcing the British government to hire charter planes to bring them home. It said that the return of these nearly 1.5 lakh British customers would be the largest repatriation in its peacetime history. The process will begin on Monday but officials warned of inevitable delays.
The UK Civil Aviation Authority said that Thomas Cook has ceased trading and its four airlines will be grounded. Further, its 21,000 employees in 16 countries, including 9,000 in the UK, will lose their jobs.
We are sorry to announce that Thomas Cook has ceased trading with immediate effect.— Thomas Cook (@ThomasCookUK) September 23, 2019
This account will not be monitored.
Please visit https://t.co/WWiKkzLYQJ for further advice and information.#ThomasCook pic.twitter.com/Nf1X3jn97x
The travel firm had a debt of 1.7 billion pound ($2.1 billion) piled on as online competition, changing travel market and geopolitical events that hit the company hard. Brexit and the European heatwave also hurt its bookings.
On Friday, Thomas Cook was seeking 200 million pounds ($250 million) to avoid going bust. Its weekend talks with shareholders and creditors failed to cause it to file for liquidation on Monday.
British Prime Minister Boris Johnson has pledged to get stranded British travellers home and also revealed that the government had rejected Thomas Cook's request for a bailout of about 150 million pounds ($187.1 million) because doing so would have set up a "moral hazard".
British customers of Thomas Cook are largely covered by government-run travel insurance program allowing them to return home if a British-based tour operator fails while they are travelling abroad.
The prominent firm ran hotels, resorts and airlines for 19 million people a year in 16 countries. According to a Reuters report, it currently has 600,000 people stranded abroad, forcing governments and insurance companies to co-ordinate a huge rescue operation. Customers are stuck in hotels that have not been paid.
Further, the corporate's collapse is likely to hit businesses of tourist destinations across the world, including popular foreign tourist destinations in India, as travel agents tied up with Thomas Cook would have to look for alternatives.
Thomas Cook India
The company has resorted to multiple means of communicating to investors in the past few days that the UK firm had exited the Indian company years ago. The Thomas Cook Group had sold its entire stake in Thomas Cook India to Toronto-based Fairfax Financial Holdings Ltd in 2012.
Thomas Cook PLC (UK) has no relationship with Thomas Cook India as we were acquired by Canada based Fairfax Financial Holdings (Fairfax) in 2012. We are completely independent of Thomas Cook UK & hence the news of their situation does not impact us. https://t.co/8hszrYqI69— Thomas Cook India (@tcookin) September 23, 2019
Shares of Thomas Cook India closed 1.75 percent lower at Rs 154 on Monday.