Thomas Cook on the cliff edge

It was announced today 23 September that Thomas Cook has gone into administration. Please see

Thomas Cook collapse – your rights on your holiday booking

Operation Matterhorn gears up to rescue stranded passengers

The travel company Thomas Cook is in serious financial trouble. Unless it can find £200 million in extra funds to secure its future, it could fall into administration this weekend. This morning Thomas Cook shares, which have dropped 92% in value over the past year, hit a record low.

News broke on Thomas Cook was in financial troubles and the company has been in talks with Fosun, the largest shareholder in the company. It looked likely that the Chinese investor would buy the tour business. However, now banks (including RBS and Lloyds) have insisted that Thomas Cook come up with extra contingency funds in case they are needed over the Winter period.

Thomas Cook aeroplane tails

On Twitter, the Thomas Cook social media team is trying to alleviate fears:

But we have seen this before when companies say that all is well and often even the employees don’t know they are about to lose their jobs. For example, in August 2019 when the Malvern group went into administration the social media team were tweeting that all was well 24 hours before announcing the administration.

But of course it needs to put out these messages. Uncertainty in this situation means that fewer people book holidays, unsure whether their holiday will go ahead and so that in turn brings less money into the company.

Thomas Cook holidays are protected by ATOL so if it does fail then 150,000 stranded holiday makers will be flown home at no extra cost to themselves. They will have accommodation paid for (although they may have to move). If the company does go under the process to repatriate holiday makers would be huge. So big, in fact, that the Civil Aviation Authority (CAA) is already on standby with a contingency plan called Operation Matterhorn, which would be the largest ever peacetime repatriation effort. The anticipated cost of this would be £600 million, borne by the tax payer.

RBS, one of Thomas Cook’s creditors, is still majority owned by the British government. Which begs the question…. If Thomas Cook needs £200 million from the banks to keep going but it would cost £600 million for a rescue effort to get people home… then why doesn’t the Government step in to force the banks to help?

 

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Author: Helen Dewdney, The Complaining Cow

Consultant | Author | Speaker | Blogger | Presenter | Journalist Helping to make, prevent and deal with complaints

4 thoughts on “Thomas Cook on the cliff edge”

  1. If the banks loaned them 200 million it’s only a sticking plaster. The Fosun deal might still get voted down by bond holders in their CDS insurance doesn’t pay out. The more money thrown at it the more there is that “could” be lost.
    It’s an awful situation and rather than blame, we should think of the employees.

    1. Whilst I agree re the sticking plaster, I don’t think the post was about blame, we need to think alternatives. A loan may help them temporarily if strict terms applied etc. Some support from the Government to put pressure on banks to help may well alleviate the situation and protect jobs.

    2. 150,000 pax even at £400 each one way is £60 Million . So the figure of £600 million is not correct . The £600 million figure assumes a cost of £4,000 per passenger which is clearly NOT correct.
      Furthermore alot of funding for this is from other tour operators who pay an£2.50 levvy for all flights they sell.. this gives CAA a big pot to go towards the repatriation.

      1. I guess they reckon all the admin to go with it plus all the extended hotel stays that will be inevitable.

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