Thomas Cook: Collapse of UK’s oldest travel group reverberates around the world — latest news
Thomas Cook to live on in India?
The Thomas Cook brand may live on in India as the British company’s now independent local unit mulls a move to snap up the iconic name, writes Benjamin Parkin in Mumbai.
Thomas Cook UK sold its Indian business amid earlier financial troubles to Canadian holding company Fairfax in 2012, agreeing that its former subsidiary could continue using the brand until 2024 in exchange for an annual fee.
Thomas Cook India, now the country’s largest travel company in its own right, was planning to change its name from 2020. But Abraham Alapatt, head of marketing, said executives will now explore acquiring the rights to continue using the Thomas Cook name indefinitely.
“Prior to what happened over the last few days, our plan was in any case to transition the brand” to a new one, he told the Financial Times. “Now there’s a new scenario. There’s an opportunity for us to evaluate keeping the Thomas Cook brand in perpetuity.”
Mr Alapatt said they will approach the official receiver, appointed as part of the liquidation process, to determine a price for which they could buy the Thomas Cook name for their business.
If the approach succeeds, the Thomas Cook name could join a curious club of erstwhile British brands who have continued in South Asia long after their parent companies ceased to exist, like Royal Enfield motorcycles or Leyland trucks.
Thomas Cook bonds plunge under heavy trading volumes
Thomas Cook’s debt has plummeted in price to even more distressed levels on Monday after the UK’s oldest travel agency ceased trading earlier in the day.
The price on the company’s bond maturing in June 2022 collapsed to just 5 cents on the euro from 8.5 cents at the end of last week, according to Refinitiv data. In a sign of how quick the group’s circumstances have changed, it had been trading at around par (or 100 cents on the euro) up until October 2018.
The bond was the most actively traded security on the European secondary market, according to MarketAxess, recording volumes of €130m by lunchtime in London. Another Thomas Cook bond had seen volumes of €69m, making it the fourth-most actively traded security.
CEO’s pay under scrutiny
The FT’s Jennifer Thompson writes:
Peter Fankhauser, Thomas Cook’s boss, received no bonus for the year to September 2018, according to the group’s most recent remuneration report, but his pension arrangements may raise eyebrows.
Mr Fankhauser’s total pay was £1.024m for the twelve months including his £725,000 salary. He also received a taxable cash allowance equivalent to 30 per cent of base salary – which last year was £217,000 – for his pension.
Although pension contributions are not the largest component of pay packages, lavish awards are increasingly under scrutiny. Earlier this year Lloyds Banking Group reduced the pension contribution rate of chief executive António Horta-Osório to bring it closer to that of regular employees, and also reduced a separate retirement payment relating to him moving from Santander to the UK group following a protest by a staff union.
Ivis, the proxy voting information service of the Investment Association, has started issuing amber tops for companies where existing rates are 25 per cent or more, and red tops – its most severe warning – for companies where new pension policies fail to bring executives and workers into alignment.
Thomas Cook’s remuneration report was approved at the company’s AGM in February with 98.96 per cent of votes cast in favour.
On the scene at London’s Gatwick airport
The FT’s Archie Hall reports from one of London’s main airports:
Thomas Cook’s collapse has derailed holiday plans for the 3,500 passengers supposed to depart from Gatwick on Thomas Cook flights today.
The company’s check-in gate was empty on Monday morning, and the announcement screens all read: “Thomas Cook has ceased trading and all flights are cancelled.”
Stefan and Zoe Sheehan were supposed to fly to the Canary Islands to scatter Zoe’s father’s ashes. Only one outbound flight was with Thomas Cook, but now the entire trip is in jeopardy.
The cheapest flights out they can find are over £600 per person. “It is what it is,” said Stefan. “I’m gutted.”
Passengers on one flight due out last night were told that it was delayed because of “staff sickness.”
One such group – grandparents Gary and Shirley (pictured above) – had been saving up for a holiday to Turkey with their son and grandson for over six months.
The family spent last night in the Premier Inn after hearing their flight was delayed.
This morning, they heard that it might take months to get their money back. Shirley said she was devastated, and that they would have to wait for their reimbursement before they could afford to book another flight.
Spanish tourism industry to face blow from Thomas Cook debacle
Thomas Cook’s collapse is a crisis for Spain’s tourism sector, the country’s political party Ciudadanos has charged, demanding a contingency plan from the caretaker Socialist government, Daniel Dombey in Madrid reports.
Melisa Rodríguez, a Ciudadanos spokeswoman, highlighted the impact on the Canary islands – to which she said 4m tourists travelled each year with Thomas Cook – and the Balearics.
She added that almost 30,000 tourists were presently stranded in the Canary islands and almost 3,000 in the Balearics; and that thousands of Spanish jobs were at stake in the Canaries while in the Balearics 1,000 people’s employment directly depended on Thomas Cook.
Ms Rodríguez said the crisis was without precedent for Spain’s hotel operators, since they could not now expect the collapsed operator to pay bills that it habitually settled after 90 days.
Spain was one of Thomas Cook’s biggest destinations, and 11 airports are affected in the country, ranging from Girona to Gran Canaria. The UK government plans to repatriate holidaymakers from all 11 airports over the next two weeks.
Travel companies step up to offer Thomas Cook staff new jobs
Thomas Cook’s collapse has put 21,000 jobs at risk, but some other travel groups have been reaching out to offer positions to impacted staff.
Train operator Great Western Railway has been particularly proactive, suggesting Thomas Cook staff apply for positions as customer hosts on the railways and tweeting out a video of one former cabin crew employee who made the switch between the two industries.
TUI, a former rival of Thomas Cook, said it will be holding a recruitment fair at its Luton Office.
Manchester braced for thousands of job losses
The city of Manchester is braced for around 3,000 job losses as the headquarters of Thomas Cook’s airline and home of 19 high street travel shops, writes Andy Bounds in Manchester.
The last Thomas Cook flight into Manchester airport arrived from Orlando at around 8.30am local time. Passengers reported that cabin crew were in tears after learning about the company’s collapse. The airline is among the biggest customers of the UK’s third biggest airport by passenger numbers.
Other airlines are expected to pick up the slack and could take on many of the Thomas Cook staff.
The TSSA union, which represents many staff, said it believed the company could still be rescued.
Manuel Cortes, general secretary said: “We are seeking urgent meetings with the Thomas Cook administrators and hope that the company can be sold as a going concern to new investors rather than being thrown on the scrap heap.”
Insurers face likely deluge of claims
Travel insurers have woken up to the potential for a deluge of claims due to the failure of Thomas Cook, but in the first instance they are suggesting that customers should look elsewhere, the FT’s insurance correspondent Oliver Ralph reports.
• People who were booked on package holidays should be able to claim back the cost through ATOL, the travel industry’s own compensation scheme.
• Those who have bought flights from Thomas Cook are not covered by ATOL, but if they used a credit card for the purchase then they should be able to claim the money back from the credit card provider.
• The same may apply to debit cards, but here the provider’s responsibilities are not so clear cut.
• If all else fails, travel insurance might kick in but much depends on the terms of the particular policy.
Mark Shepherd, head of general insurance policy at the Association of British Insurers, said:
“Travel insurance policies can provide back up if compensation cannot be accessed from ATOL cover, banks or credit card providers. In the first instance, customers should check their policies on what cover they have. Those with scheduled airline failure or end supplier failure should be able to get compensation for the cost of the flight. Where travel disruption is included, they will be covered for extra costs, such as additional hotel accommodation or the cost of new flights, where these are not recoverable from any other source.”
Shares in listed travel insurers such as Direct Line, Aviva and Saga were broadly flat on Monday morning.
Turkish hotels to face ‘painful consequences’ from Thomas Cook collapse
The FT’s Laura Pitel reports from Ankara:
Turkey was the second most popular summer destination for Thomas Cook holidaymakers this year, according to the company’s website.
That means that many tourists are stranded — around 21,000, the Turkish culture and tourism ministry said in a statement published on Twitter.
The collapse is also a blow for the country’s tourism sector, which is a key pillar of the Turkish economy.
Osman Ayik, president of the Turkish Hotelliers’ Association (Turofed) warned that there would be painful consequences for some businesses. “Some hotels worked solely for Thomas Cook,” he said, according to comments reported by Haberturk newspaper. “Many hotels will suffer difficulties.”
He said that some Turkish hotel owners still hadn’t received their dues from tour operators that went bust long ago. “If something similar happens with Thomas Cook then hotelliers could go bankrupt,” he added.
The tourism ministry said that the Turkish government is working on a loan support package for local companies who are affected by the firm’s collapse. Businesses in the southern coastal resorts around Marmaris and Fethiye, which are popular with British tourists, are likely to be among the worst hit.
First repatriation flight en-route to the UK
The first flight repatriating stranded Thomas Cook passengers has taken off from New York and is due to arrive in Manchester at around 5pm local time.
The Civil Aviation Authority, which is managing the UK’s biggest ever peacetime repatriation effort, said the flight is returning over 300 passengers to the UK.
It looks like the flight is this Atlas Air-chartered Boeing 747, with the tracking courtesy of FlightAware:
Business as usual in Russia
Thomas Cook’s Russian business has said it will “continue its activities as planned” despite the collapse of its parent company, reports Henry Foy in Moscow.
Russian tour operator Intourist, in which Thomas Cook owns a 50.1 per cent stake, said the collapse “affects solely British legal entities” and that it is an “operationally and legally independent company”.
The company, one of Russia’s largest tour operators, became part of the Thomas Cook group in 2011, and uses the British company’s logo in its official branding.
All departures and return charter flights are being carried out as planned and hotel placements for tourists are guaranteed.
Tour operator ‘Intourist’ carries out its own contracting of hotels, has its own financial guarantees and its own contracted transportation. This means that the company will continue to fulfill all its obligations to tourists and partners…The company apologizes to all tourists and partners for the inconvenience associated with the negative news in the background.
Tens of thousands of German tourists caught up
The FT’s Tobias Buck is in Berlin:
The collapse of Thomas Cook has also hit an estimated 140,000 holidaymakers from Germany, the group said on Monday. Another 21,000 German tourists were booked on trips that were supposed to leave on Monday and Tuesday.
The group said it had now officially stopped selling holidays for all its German travel companies, which include Neckermann Reisen, Öger Tours and Thomas Cook Signature.
Under German law, package holiday providers like Thomas Cook are obliged to take out an insurance to cover the repatriation of tourists and the financial losses suffered by holidaymakers in the event of an insolvency. In the past, this insurance regime has worked relatively smoothly, though the case of Thomas Cook is likely to provide a much sterner test: officials point out that the total liability of the German insurance regime is capped at €110m, which might well be breached in the current situation.
Condor, the holiday airline owned by Thomas Cook, said it continued to operate “regularly”, though it had requested a bridge loan from the German government to avoid “liquidity squeezes” at the carrier. “The government is currently examining this [request],” the group said in a statement on Monday.
Government defends handling of Thomas Cook
It has not taken long for recriminations to begin in Westminster.
The UK government was dragged into the corporate collapse after Thomas Cook asked for a state bailout of around £150m late last week. Talks between the government and the company’s stakeholders failed to produce a deal, despite one source telling the FT: “having a granny stranded in Tunisia is not a good look.”
The government is instead stitching together a massive repatriation effort, and Transport secretary Grant Shapps has been on the airwaves this morning defending the decision not to pump money into the ailing company.
He told the BBC a cash injection from the state would only have kept Thomas Cook afloat “for a very short period of time.”
“The company had systemic issues,” he added.
Labour frontbencher Rebecca Long-Bailey said the government decision was “disgraceful.”
Thomas Cook collapses after rescue talks fail
Good morning, welcome to the FT’s live coverage of the collapse of Thomas Cook. The 178-year old travel company went under overnight after weekend talks with lenders, shareholders and the UK government failed to agree on a rescue deal.
We will be covering live reaction and analysis on this blog, with the historic company’s demise set to cause rolling chaos thoughout the travel industry as it leaves 150,000 holidaymakers stranded and 21,000 jobs at risk. It has also ignited a political storm over the government’s role after Thomas Cook approached Downing Street for a bailout on Friday.