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Story of Thomas Cook, crisis embattled 178-years-old UK’s travel company

Thomas Cook had two ambitions when he founded a travel company in 1841, to help Britons see the world and keep them sober.

Thomas Cook customers watching as their flights were cancelled.
Thomas Cook customers watching as their flights were cancelled. PHOTO: Chronicle Live

Cook, a 32-year-old cabinet maker, had the idea on the walk from his home in Market Harborough to a temperance meeting in Leicester. For the next meeting, Cook laid on a train, charging a shilling per head for the journey between Leceister and Loughborough.

It’s probably fair to say that Cook’s first ambition was an abject failure, but he certainly succeeded in his second. Thomas Cook became one of the biggest travel companies in the world, serving an estimated 22 million customers per year.

Almost two centuries later and 600,000 Thomas Cook customers have been left stranded overseas from as far as California and Caribbean, after the travel giant collapsed, failing to strike a deal with its investors, forcing it to enter administration.

Hit by a cocktail of high debt levels, online competition and geopolitical uncertainty, Thomas Cook needed to find another £200 million (€226 million) on top of a £900 million (€1 billion) package it had already agreed to see it through the winter months.

Throughout its history, Thomas Cook had its ups and downs. During World War 2 it was almost destroyed completely when its European arm was seized by the Nazis and its British operations requisitioned by the British government.

It remained in public hands until 1972, when it was bought by a consortium of banks and only just managed to survive the recession that battered the UK in the 1970s. It expanded its network of shops and in 1992 was bought by another consortium, this time from Germany.

In 2011, when Thomas Cook merged its UK retail operations with the Co-operative Group and the Midlands Co-operative Society it created the UK’s largest chain of travel agents. Three years later it announced a new partnership with Chinese investment group Fosun International.

By May 16, 2019, Thomas Cook had issued its third profit warning in less than a year, saying discounting and higher fuel and hotel costs will hurt it during the peak summer season.

In August, it agreed a rescue package that would have seen Fosun Tourism take over its tour operations and creditor banks and bondholders acquire its airline.

But that rescue deal has now fallen through, and the company’s collapse has sparked the largest peacetime repatriation effort in UK’s history.

Thomas Cook will be sold as a whole or in parts after its collapse, the company’s second-largest shareholder said today – adding he would see what is offered before deciding whether to buy more assets.

Neset Kockar, who holds an 8% stake in the UK-based travel firm, said Thomas Cook owes “a few hundred million pounds” to Turkish businesses that may not be paid after it is sold.

Kockar is also the chairman of Turkey-based Anex Tour, which caters mainly to tourists from countries such as Russia and Ukraine.

Thomas Cook owes Tunisian hotels £53 million for stays in July and August, the country’s tourism minister Rene Trabelsi told Reuters.

He added that 4,500 British Thomas Cook customers are still in the country.

Tourism is a vital sector for Tunisia’s economy and a key source of foreign currency, and the government had expected another 50,000 Thomas Cook customers to visit this year, he added.

“I will have a meeting on Tuesday with the British Embassy in Tunisia and the hotel owners to see how debt could be redeemed,” Trabelsi said.

[Contributions from: euronews, Reuters and Chronicle Live]

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