Thomas Cook Collapses Under Debt

Thomas Cook Collapses Under Debt
Thomas Cook is often considered to be UK's biggest brand, Photo Credit: Shutterstock

Travel giant Thomas Cook announces bankruptcy, leaving thousands of passengers stranded

OT Staff
September 23 , 2019
01 Min Read

One of the biggest names in the travel industry has finally succumbed to the pressures of insurmountable debts. The 178-year-old British travel company Thomas Cook declared bankruptcy after failing to seek $250 million from private investors. This sudden collapse has left thousands of Thomas Cook passengers stranded around the globe.

[Indian travellers, breathe a sigh of relief. Thomas Cook (India) is not affected. The Thomas Cook India group is an entirely different entity since August 2012 when it was acquired by Fairfax Financial Holdings (Fairfax), a Canada based multinational investment company.]

After several rounds of talks with its investors led by the largest shareholder, China’s Fosun Travel Group, failed to produce results, the travel giant had no other option but to declare its collapse. Reports have called this “the largest peacetime repatriation effort” in British history. Consequently, the UK government has hired charted planes, to bring 150,000 stranded passengers back home.

In addition to owning its own fleet of aircrafts, Thomas Cook also owns the German airline Condor. As per reports, Condor will continue its operations and has applied for a bridge loan from the German government.

Reports claim that with increasing number of low – fare airlines and online booking portals, travellers are arranging their own trips which has adversely hit the industry. Though a government bailout worth £ 150 million was requested earlier, the Boris Johnson led government refused any such aid.

The demise of UK’s biggest travel company has put the jobs of around 21,000 employers at stake. Chinese shareholder Fosun had also proposed a 1.1 billion dollar bail out in exchange for control over tour operations and a minority stake in the company.

This bankruptcy follows the collapsed deals of Wow Air, an Icelandic airline and Monarch airlines, a UK based carrier. According to reports, as of March 31, 2019, the company had a debt of £2 billion.

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