The 178-year-old debt-plagued group, which had struggled against fierce online competition for some time and blamed Brexit uncertainty for a recent drop in bookings, declared bankruptcy after failing to secure £200 million from private investors.
Monday’s bankruptcy, which followed a lengthy period of chronic financial turmoil after a disastrous 2007 merger deal, left around 600,000 tourists stranded worldwide according to Thomas Cook, while its 22,000 staff are out of a job.
The British government launched emergency plans to bring some 150,000 UK travellers back home from destinations including Bulgaria, Cuba Turkey and the United States.
Authorities have meanwhile launched an official investigation into the corporate collapse, according to a Downing Street spokeswoman who also cautioned that there were “a number of complicated reasons behind the failure”.
Thomas Cook said in a statement that “despite considerable efforts”, it was unable to reach an agreement between the company's stakeholders and proposed new money providers.
“The company’s board has therefore concluded that it had no choice but to take steps to enter into compulsory liquidation with immediate effect,” it added.
The long-troubled group has also been blighted by enormous costs arising from its disastrous 2007 merger with MyTravel, a deal which left it plagued with huge levels of debt.
The UK government said Monday it had hired planes to fly home British tourists, in a mass repatriation plan codenamed Operation Matterhorn which began immediately.
Launching Britain’s “largest repatriation in peacetime history”, Transport Secretary Grant Shapps added that the government and UK Civil Aviation Authority had hired dozens of charter planes to fly home Thomas Cook customers.
“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,” the government said.
Both a tour operator and an airline, the travel giant’s key destinations were in Southern Europe and the Mediterranean but it offered also holidays in Asia, North Africa and the Caribbean.
In Cuba there were around 2,000 people booked with Thomas Cook stranded on the island, prompting the British Ambassador there, Antony Stokes, tweet: “We are working closely with the Cuban authorities and Thomas Cook staff to help ensure customers in Cuban can continue with their holidays and return safely to the UK.”
Scenes of passengers queuing in long lines or sitting on their suitcases were seen at the Palma airport on Spain’s holiday island of Majorca.
“We’re getting told so many different stories about where we are actually going to fly to and the last we have heard is we're going into Manchester,” said Mary Cara, 50, who was travelling back to Glasgow.
In Mexico’s resort of Cancun, one Facebook user had a carefree reaction, writing on a page devoted to an all-inclusive resort used by Thomas Cook: “Who’s up for a repatriation pool party?”
ForThomas Cook chief executive Peter Fankhauser, the company’s demise was “a matter of profound regret to me and the rest of the board that we were not successful.
“This marks a deeply sad day for the company,” he added.
As well as grounding its planes, Thomas Cook has been forced to shut travel agencies, making redundant 22,000 global employees – 9,000 of whom are in Britain.
Chinese peer Fosun, which was already the biggest shareholder in Thomas Cook, had agreed last month to inject £450 million into the business as part of an initial £900 million rescue package.
In return, Fosun was to acquire a 75% stake in Thomas Cook’s tour operating division and 25% of its airline unit.
“Fosun is disappointed that Thomas Cook Group has not been able to find a viable solution for its proposed recapitalisation with other affiliates, core lending banks, senior noteholders and additional involved parties,” it said Monday.
Cabinet maker Thomas Cook created the travel firm in 1841, transporting temperance supporters by train between British cities.
It soon began arranging foreign trips, being the first operator to take British travellers on escorted visits to Europe in 1855, followed soon after by destinations further afield.
The tour operator grew into a huge operation but fell into massive debt despite recent annual turnover of £10 billion from transporting about 20 million customers worldwide.
The company’s failure comes just two years after the collapse of Monarch Airlines that prompted the British government to take emergency action and return 110,000 stranded passengers, costing taxpayers £60 million on hiring planes.
Thomas Cook’s collapse caps a dramatic fall from grace for a company which was demoted from London's FTSE 100 shares index in 2010 – and from the second-tier FTSE 250 last year. Its shares are worthless and now suspended.
Flight, hotel woes in Spain
Standing in a long line or sitting on their suitcases, anxious Thomas Cook passengers at Palma airport faced an uncertain wait on Monday (Sept 23) for a flight to Britain following the collapse of the travel giant.
At the same time many tourists arriving on Spain’s resort island of Majorca for the start of their holidays found the hotel reservations they made through the company were not valid.
Marianne Strenger, a pensioner in her 70s who came to Spain from Berlin with her daughter for a one-week beach holiday, said reception staff at the Hotel Palma Bay said when she tried to check in that they had not received any money from Thomas Cook for her booking and she had to pay for her accommodation again.
“They treated me as if I was the one who was insolvent,” she told AFP outside the three-star hotel on Monday night.
Other guests at the hotel told of similar experiences when they tried to check in.
“We had to pay twice,” said Nils Lichte, a 30-year-old supermarket manager from Cologne.
Among those on Majorca struggling to leave the island was Clare Osborne, who was worried she would not make it to a funeral of a family member in Glasgow on Tuesday.
The 49-year-old accountancy assistant was told she would be put on a 9 pm flight to Manchester and then face “three-and-a-half to four-hour journey” by bus to Glasgow.
“So it’s very tight and we don’t really know if it’s going to be nine o’clock, so I’m getting very anxious.”
Kevin Mundie, a 53-year-old hydraulics engineer, also had to return to Glasgow by flying first to Manchester, then making the rest of the journey by bus.
“It’s going to be nearly 24 hours by the time we get home from when we got up this morning,” he said.
Volunteers distributed water to the passengers as they queued in the slow moving line to check in to the alternative flight to Manchester from Palma airport, Spain’s third busiest.
British government officials, wearing yellow vests decorated with a Union Jack, were also on hand to provide information.
“They have been a great help,” said John Raid, 57, waiting with his wife and grandson.
The family had been scheduled to fly back to Newcastle on Monday morning, but have instead been put on an evening Iberia flight to Manchester.
From Manchester they have been told that a bus will be waiting to take them to Newcastle, about 145 kilometres (90 miles) away.
Raid said Thomas Cook staff continued to provide them with assistance on Monday morning as well as a free transfer to the airport.
“It’s one of these things that happens,” he said.
‘So much time worrying’
Other passengers however complained that they were not getting information from the collapsed company about how to get home and learned about return flights from other passengers.
“We’re getting told so many different stories,” said Mary Care, 50, who was travelling back to Glasgow.
For Julie Payne, a 34-year-old store employee from Newcastle, the uncertainty about the fate of Thomas Cook cast a shadow over the last days of her beach holiday in Majorca.
“We just spent so much time worrying about what was going to happen these last few days, looking up the news, instead of relaxing,” she said, sitting on her suitcase in line with two friends to check in for the Manchester flight.
Mary Allardycee, a 63-year-old sales assistant who was travelling back to Glasgow, said she had heard of Thomas Cook’s problems, “but you never think it’s going to happen to you”.
“You really don’t, but unfortunately it has and there is nothing we can do about it so we are sitting here waiting to get a flight,” she said.