Closed Thomas Cook: Collapse of UK’s oldest travel group reverberates around the world — as it happened

GREECE-BRITAIN-CHINA-TRAVEL-TOURISM-THOMAS-COOK

A live blog from FT.com


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.


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.”


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.


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.


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:


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.


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.


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.”


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.


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.


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.


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.


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.


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’s collapse ripples through Europe

The FT’s Guy Chazan has more on the fallout in Germany, where Thomas Cook’s insolvency has had a big knock-on effect on the German travel market:

The company’s German subsidiaries – Neckermann, Öger Tours, Air Marin and Bucher Reisen – have all stopped sales of package holidays. According to German news agency dpa, 140,000 German travellers have been affected.

Airline Condor said that it could no longer get passengers who had booked with Thomas Cook operators to their destinations. Condor is seeking a bridging loan from the German government to avoid a shortfall in liquidity. Dpa said the amount it has requested is €200m.

Thomas Cook Germany, meanwhile, was looking at all options. “If these fail, management will be forced to file for insolvency for Thomas Cook GmbH, Thomas Cook Touristik GmbH, Bucher Reisen & Öger Tours GmbH and possibly other companies too,” the company said.

The German government tweeted that Thomas Cook Germany and Condor were operating as normal and bringing holiday-makers back home. “We recommend that travellers who are about to start their journey speak to their tour operator”.


Fosun backed Thomas Cook in hopes of tapping rising Chinese middle class

The FT’s Don Weinland writes:

Chinese investment management group Fosun has been building a global travel empire that included holding large stakes in the Club Med resort business, Canadian circus and dance company Cirque du Soleil and, until its collapse into liquidation, Thomas Cook.

The Shanghai-based company first bought into the UK travel group in 2015 and was its largest shareholder with an 18 per cent stake. The strategy behind the investments are summed up in what Fosun has called its “happiness” business unit, or a collection of travel and leisure assets marketed toward China’s expanding middle class.

The mastermind behind the operations is Guo Guangchang, a jet-setting dealmaker that has at times fallen afoul of Chinese authorities. At the height of a dealmaking spree in 2015, Mr Guo disappeared for more than a week. When he re-emerged, he said he had been “assisting an investigation” by Chinese authorities.

Despite that setback, Mr Guo and Fosun have continued to strike large investment both in China and overseas. Other recent acquisitions focused on feeding affluent Chinese people have included stakes in Chinese brewer Tsingtao Brewery and French margarine producer St Hubert.

Although Thomas Cook was not fully integrated with other Fosun businesses, analysts have pointed out that the travel company’s airlines could have formed a crucial link to its resorts around the world.

Fosun was willing to put up £450m to rescue Thomas Cook in exchange for more equity but people close to the Chinese company have noted the debt constraints it was already operating under. Management at the group has set out a plan to cut its gearing ratio as many acquisitive Chinese companies come under pressure from the government for stirring up potential risks in the banking system.


What sunk Thomas Cook?

Thomas Cook was a 187-year-old travel company which was unable to adapt to the digital age. Once a leading member of the blue-ribbon FTSE 100, the group’s share price tumbled in recent years with it unable to respond as the industry it had help shape became unrecognisable.

As the FT’s leisure industries reporter Alice Hancock explains, its network of more than 500 high street branches, something that once offered enviable economies of scale and easy access to customers —instead became a draining financial burden.

Thomas Cook’s business model, in which it pays months in advance to secure hotel rooms for the summer, was also exposed as flat-footed by nimbler online competitors such as On The Beach and Jet2 which are better at adjusting to changing consumer demands.


CDS holders: the $250m winners from Thomas Cook’s failure

The FT’s Robert Smith reports:

Among the wreckage of Thomas Cook’s collapse, there is at least one clear winner: hedge funds who bought credit-default swaps that will now pay out after the travel agent’s liquidation.

CDS are derivatives that behave like insurance contracts, protecting holders against the risk that a company does not repay its debts. Crucially, the derivatives are not legally classed as insurance, allowing them to be freely traded by institutions that have no exposure to the debt concerned.

Both buyers and sellers are typically traders at hedge funds and banks. Those who sold swaps should now have to make payouts to those who bought default protection.

How big will this windfall be?

Well there were $250m of CDS bets on Thomas Cook’s outstanding in mid-August, according to data from the International Swaps and Derivatives Association (this is a so-called “net notional” figure, which in simple terms reflects the total amount that sellers could transfer to buyers in the event of a payout).

The fact that some of Thomas Cook’s bondholders also owned CDS added another layer of complexity to its restructuring: our Tail Risk column last week went into the “almost theological complexity” of determining whether Thomas Cook’s CDS would pay out (this uncertainty is now resolved, given the company’s liquidation).

The lack of clarity on whether Thomas Cook’s proposed restructuring plan would trigger pay outs on the CDS had led a group of bondholders to threaten to block the deal. The fact that the company’s situation unraveled so quickly means that we did not see that unseemly situation: where hedge funds vetoed a rescue deal to guarantee payouts on their swaps.

But still, the motivations of different CDS holders will likely be closely examined in the coming days. There will also be renewed scrutiny of the difficulties these derivatives can add to debt restructurings.


114,000 passengers were scheduled to fly to and from Spain over next 15 days

Daniel Dombey reports from Madrid:

Spain’s industry ministry said that around 114,000 passengers, mostly foreign tourists, were due to travel on Thomas Cook flights to and from Spain over the next 15 days.

It said that during that time, the company had been due to operate 525 flights in Spanish airports, with a total close to 120,000 seats. Given the company’s high occupancy rate, this yielded the estimate of 114,000 passengers.

It added that 70 per cent of the flights were on UK-Spanish routes, with Norway, Sweden and Denmark accounting for the remainder.

The ministry said that alternative flights back to the UK were planned from Alicante, Almería, Girona, Reus, Ibiza, Minorca, Palma, Fuerteventura, Gran Canaria, Lanzarote and Tenerife.


Holidaymakers’ repatriation from Greece begins

Greece’s tourism minister Haris Theoharis said the government was working with UK civil aviation authorities to repatriate almost 50,000 tourists stranded on the Greek islands following the collapse of Thomas Cook, Kerin Hope reports from Athens.

“They are mostly British holidaymakers…and their repatriation has already started,” Mr Theoharis said.

Tourists boarded flights back to the UK from the islands of Zakythos, Corfu and Kos on Monday as scheduled. If all goes as planned some 22,000 people will leave “in the next few days and the remainder as their holidays finish over the next two weeks,” Mr Theoharis said.

Thomas Cook is one of the biggest tourism operators in Greece, sending 3m visitors a year to the islands. Almost 50 Greek hotels have franchise agreements with the company.

Alecos Efstathiou, a hotel owner on Skiathos island, said: “We’re going to face serious problems – our tourism is 50 per cent from the UK and we can’t replace them in just a few weeks.”


Thomas Cook was once nationalised

UK transport secretary Grant Shapps has defended not giving Thomas Cook a £200m bailout on the grounds that “governments don’t usually go around investing in travel companies”.

But as the FT’s Andy Bounds reports, the state did run the business as recently as 1972, after the UK nationalised it during the Second World War:

• Then, the company was owned by the Belgium-based Compagnie Internationale des Wagons-Lits, and the country was overrun by Germany.

• In 1948 it became part of the British Transport Commission, which owned British Rail, bus companies, ports and a host of other transport infrastructure.

• In 1972 the government sold Thomas Cook to a consortium of Midland Bank, Trust House Forte, the hotel operator, and the Automobile Association.

• Twenty years later the Midland, which by then had sole control, sold it to Westdeutsche Landesbank, the German bank, and the LTU Group, a German charter airline.

• In 2001 German travel company Condor & Neckermann bought the company and in 2007 it merged with MyTravel to form Thomas Cook Group, with a London stock exchange listing.

• Thomas Cook began back in 1841 when the former priest organised a return rail journey from Leicester to a temperance meeting in Loughborough, 12 miles away. In 1845 he ran his first trip for profit, a journey by rail to Liverpool from Leicester, Nottingham and Derby.

• In 1855 Thomas Cook sold his first continental tour, from Harwich to Belgium, Germany and France. This was the first package holiday with accommodation and food also included.

• The company went on to run the first package holidays by air, and invent the traveller’s cheque.


Lex: Nostalgia counts for nothing unless it prompts consumer purchases

Here is Lex’s take on the Thomas Cook meltdown, which argues that the group’s crucial mistake came in the noughties when it stuck with high-street, mass market tourism, even as online disruption grew.

A string of ineffectual bosses talked up the value of Thomas Cook’s brand. It has proved worthless, as have shares in the insolvent holidays business.

Read the full piece here.


Here’s where we stand on the day the UK’s oldest travel agency ceased trading:

• Thomas Cook’s board said that the failure of rescue talks between banks, shareholders and the UK government meant “it had no choice but to take steps to enter into compulsory liquidation with immediate effect”.

• The collapse leaves 21,000 jobs at risk and 150,000 UK holidaymakers stranded abroad.

• The UK’s biggest ever peacetime repatriation operation is underway, as the government charters planes to bring stranded tourists home.

• In Greece alone, 50,000 holidaymakers are stranded, while Spain’s industry ministry said that around 114,000 passengers, mostly foreign tourists, were due to travel on Thomas Cook flights to and from Spain over the next 15 days.

• The British government has defended its decision not to step in to help the teetering group. Transport secretary Grant Shapps said a cash injection from the state would only have kept Thomas Cook afloat “for a very short period of time.”

• Thomas Cook’s debt plummeted in price to even more distressed levels on Monday.


Thomas Cook: A history in FT clippings

Edwin Esosa has dug through the FT’s archives and found advertisements and stories about Thomas Cook dating back to the late 19th Century. It highlights the travel agency’s long and sometimes difficult history.

1896: Thomas Cook advertises trips to Italy and the Riviera

1941: Thomas Cook reaches its centenary

1942: Thomas Cook nationalised

1958: Thomas Cook reaches 150 year milestone

1968: Calls to de-nationalise Thomas Cook

1975: Thomas Cook looks to re-brand itself

1976 In the midst of apartheid, Thomas Cook stops promoting South African holidays

1978: Thomas Cook sees it profits surpass £5m


Thomas Cook’s earlier days

Thomas Cook’s early history was intimately connected to Britain’s rapidly advancing Victorian railway network, and the company went on to offer its first trips to the continent in the 1850s.

This poster from 1910 shows Thomas Cook promoting its rail links and round the world travel tickets.


Moody’s: Brexit helped contribute to Thomas Cook’s demise

Moody’s has withdrawn its ratings on Thomas Cook, following the company’s collapse.

Announcing the news, the influential rating agency outlined some of its views on what led to Thomas Cook’s demise, including the role that Brexit and the subsequently weaker pound played:

The failure of Thomas Cook has been driven by a range of factors, including pressure from on line travel agents and changing consumer habits away from package holidays. Thomas Cook has also experienced a weakening macro economic environment across its markets, with demand from UK customers particularly affected given concerns over Brexit and the depreciation of the pound sterling. It also demonstrates the pace by which customer and supplier confidence in the company reduced. Thomas Cook survived last year’s winter low season, and had over £1 billion cash on balance sheet as at September 2018, however the loss of supplier credit and weak trading caused a £1.1 billion funding requirement.


Brace, brace

It has been a turbulent decade for Thomas Cook. Here is an overview of the key events that led to its demise.

1990s-2000s

The demise of the package holiday — the heart of Thomas Cook’s business — is well under way. The rise of the internet and low-cost airlines results in package holidays losing around a third of the market as customers shift to a “pick and mix” model.

February 12 2007

Thomas Cook merges with MyTravel during a wave of consolidation that reduces Europe’s four leading tour operators to two within a month. Rival operator Tui joins up with First Choice Holidays to create Europe’s largest tour operator.

August 3 2011

Chief executive Manny Fontenla-Novoa steps down as a string of profit warnings and concerns over a mounting debt pile built up through acquisitions send the company’s stock plummeting as much as 95 per cent over the course of the year to a low of 8p.

The group struggles to pass on cost increases to UK travellers and French holidaymakers shun north Africa in the wake of the Arab spring.

It announces a wide-ranging review into its UK operations — which analysts see as an admission its brick and mortar focused business model is flawed.

November 25 2011

Thomas Cook secures a £200m loan facility to stave off a cash crisis that had threatened its survival.

November 26 2014

Harriet Green departs as chief executive after leading a turnround that increased the share price from 14p to 190p through cost cuts, asset sales, a new online strategy and reinvigorated travel products.

Ms Green was credited with bringing the company back from the brink, although criticised over a slow response to the deaths of two children in Corfu as a result of carbon monoxide poisoning from a faulty boiler at their hotel.

March 6 2015

Chinese conglomerate Fosun buys an initial stake in Thomas Cook in vote of confidence. Later in the year, the group returns to profit for the first time in 15 years but warns of an “unprecedented level of disruption” in the travel market.

June 26 2015

A mass shooting in a tourist resort in Tunisia severely hurts demand for holidays to the country, one of Thomas Cook’s main destinations, and prompts it to refocus on the competitive Spanish market.

October 11 2017

Jet2Holidays overtakes Thomas Cook to become the second biggest tour operator in the UK, underlining the arrival of new players in a market that had previously been split between Thomas Cook and Tui. The step change in market dynamics to a three-player sector puts Thomas Cook profits under fresh pressure.

November 27 2018

Issues from Brexit hitting consumer spending to a summer heatwave and rising competition causes Thomas Cook to issue two profit warnings in as many months.

May 16 2019

The group reports a record loss of £1.5bn, triggered by an impairment charge on the 2007 MyTravel merger and a steep drop in summer sales. Its debt comes under heavy selling pressure.

August 28 2019

The company appears to have staved off disaster as it agrees the main terms of a £900m rescue deal with Fosun, its biggest shareholder, and its debtholders.

September 23 2019

Thomas Cook collapses after talks with lenders, shareholders and the UK government fail to piece together a rescue package after its banks demanded it secure a further £200m funding.


Not all bad news

While there are certainly plenty of losers from Thomas Cook’s malaise — from its stranded passengers to its long-suffering shareholders — the travel operator’s exit from the market will be warmly welcomed in some quarters.

Its main rival Tui was the biggest gainer on the FTSE 100 today on hopes of tighter package holiday capacity and improved pricing, writes the FT’s Bryce Elder. It added 6 per cent.

Tui and Thomas Cook overlap in key markets including the UK, Germany and the Nordics, said Barclays. It forecast that if Tui picked up £2bn of lost Thomas Cook revenue it would be worth an extra 4 per cent to group trading profit.

Shares in smaller travel retailer On The Beach rose 8 per cent even after cautioning that it would book the cost of covering Thomas Cook’s cancelled flights as a one-off exceptional, as well as losing margin on cancelled bookings

Meanwhile, EasyJet and Ryanair led gains among the airline stocks, rising 4 per cent and 1 per cent, respectively.

Thomas Cook accounted for about 1.5 per cent of European short-haul capacity from the UK in the winter, rising to about 3 per cent in the summer, analysts said.


Condor says it is still flying high

The FT’s Tobias Buck reports from Berlin:

Condor, the German airline owned by Thomas Cook, said that all its flights were operating as planned on Monday, and stressed that the carrier remained profitable company despite the insolvency of its owner.

“I can assure you that we will do everything in our power and try everything we can so that our fleet will continue to bring our guests to their holiday destinations around the world and back home again,” Ralf Teckentrup, the Condor chief executive, said in a statement.

Condor said there were currently 240,000 passengers who had travelled abroad on one of its planes. All customers currently abroad who had booked their holidays with Thomas Cook would be flown back as planned. However, passengers who were hoping to leave on holiday on Monday as part of a Thomas Cook package were denied boarding by the German carrier.

Condor also confirmed that it had asked the German government for a bridge loan, but declined to comment on media reports suggesting it had requested a loan worth €200m.

Condor said it was a profitable, cash-flow positive company that has recorded earnings before interest and tax of €43m for the business year 2017/2018. Earnings for the current year were expected to be higher still, Condor added.


Turkish businessman Kockar laments ‘many Thomas Cook mistakes’

Spare a thought for Neset Kockar, a Turkish businessman who bought an 8 per cent stake in Thomas Cook less than two months ago, writes Laura Pitel in Ankara and Alice Hancock in London.

In a statement to the Turkish website turizmguncel.com (Tourism Today), Mr Kockar said that he had known at the time that Thomas Cook was badly run, before adding: “But I didn’t know it was this badly run. You cannot make so many mistakes, one after the other.”

Mr Kockar’s stake was worth around £7m at the end of July, according to FactSet data.

The businessman had been planning a joint venture with Thomas Cook in the hope that he could capitalise on Turkish-Russian business. In an interview one month ago, Mr Kockar said that a partnership between his own company Anex Tour and Thomas Cook had “enormous potential for a very successful company. This company will have the roots and stamina of the past, and vision and pace of the future.”


Thomas Cook’s collapse to impact Malta hotels, tourism minister says

The FT’s Michael Peel reports from Brussels:

Konrad Mizzi, Malta’s tourism minister, said the country’s tourism authority had been in touch with the CAA “over the last days and weeks” about the Thomas Cook situation and had made “thorough planning” for the repatriation of tourists.

He added that about 50,000 Thomas Cook holidaymakers visited the Mediterranean island state each year, although he did not have a figure for how many were there right now.

“Flights have been chartered,” he said. “The Malta Tourism Authority will offer assistance to anybody that requires support.”

He said the country’s tourism industry would be affected. “Malta hotels will be exposed because obviously payments are usually done 90 days in arrears,” he said.

“It’s sad because Thomas Cook had a tremendous reputation globally,” he said, adding that the demise of the company would be a “big test” of UK traveller compensation arrangements.


Budget airline looks to gain from Thomas Cook’s fall

It didn’t take long for at least one of Thomas Cook’s rivals in the travel industry to seek to capitalise on its demise.

In an email to customers Monday about its holiday packages, budget airline Jet2 touted its ATOL financial protection for travellers, saying: “The countdown to a holiday should be excitement filled and worry-free.”

The email’s subject line read: “Discover package holidays you can trust.”

Shares in Dart Group, Jet2′s parent company, were up more than 4 per cent today.


UK PM Johnson questions executive pay at faltering companies

The FT’s George Parker reports from London

Boris Johnson has questioned whether directors should pay themselves “large sums of money” as their businesses go “down the tubes” following the demise of Thomas Cook as he hinted at forcing companies to be properly insured against collapse.

In an interview at the residence of the British consulate general in New York, the PM said: “I think the first thing, obviously, is that our thoughts are very much with the travellers of Thomas Cook, the customers, holidaymakers, who have been stranded by this collapse.

A huge effort is underway now as you know to bring them all home. We are confident we can do that.

I think the questions we’ve got to ask ourselves now: how can this thing be stopped from happening in the future? How can we make sure that tour operators take proper precautions with their business models where you don’t end up with a situation where the taxpayer, the state, is having to step in and bring people home?

I have questions for one about whether it’s right that the directors, or whoever, the board, should pay themselves large sums when businesses can go down the tubes like that.

Asked about sanctions on directors and tougher rules, the PM said: “I think that you need to have some system by which tour operators properly insure themselves against this kind of eventuality.”

He said work is already underway following Monarch.

“Frankly that work has not yet produced the answer,” he said.

It cannot be right that holidaymakers are left stranded and the Government has to step in.


US cruise lines knocked in Thomas Cook fallout

Shares in US cruise lines were taking on water Monday in the wake of Thomas Cook’s collapse.

Carnival, the world’s largest cruise operator, slipped more than 2 per cent in afternoon trading in New York. Travel packages sold by Thomas Cook included cruise holidays.

Royal Caribbean was down around 1.8 per cent, while Norwegian Cruise Line fell a little more than 1 per cent. The broader S&P 500 was up 0.1 per cent.


Manchester mayor moves to help Thomas Cook employees find new jobs

Greater Manchester mayor Andy Burnham has moved to help Thomas Cook employees find new jobs or training.

Around 3,000 staff work in the city, which is the headquarters of its airline and aircraft maintenance centre, reports Andy Bounds in Manchester.

“My heart goes out to everyone affected by the collapse,” Mr Burnham said. He met affected staff at the airport on Monday afternoon. “I have been at the airport today meeting staff representatives and I know this news has hit them very hard, leaving them without a job and in many cases three weeks’ pay.

From Tuesday, affected staff will be able to find advice and support through a website – www.gmthomascook.com or by emailing info@gmthomascook.com.

A taskforce including Manchester Airports Group, trades unions, the government’s job agency, local authorities and others has been assembled. Its first step is to find out what job vacancies there are with other airlines at the UK’s third biggest airport.


Leadsom calls for scrutiny of directors’ behaviour

Business Secretary Andrea Leadsom has asked authorities investigating the collapse of Thomas Cook to pay close attention to the behavior of directors, reports Bethan Staton in London.

Writing on Monday to chief executive officer of insolvency services at the department for business, Dean Beale, Ms Leadsom said the Official Receiver should treat the cause of Thomas Cook’s failure as “a priority”. The receiver, appointed by the court as liquidator, is already under a statutory duty to look into the reasons for a company’s collapse.

“I ask that the investigation by the Official Receiver looks, not only at the conduct of directors immediately prior to and at insolvency, but also at whether any action by directors has caused detriment to creditors or to the pensions schemes,” Ms Leadsom wrote.

Her intervention follows remarks by Prime Minister Boris Johnson, who in an interview in New York said he “had questions” about whether directors “should pay themselves large sums when businesses can go down the tubes like that.”


Thomas Cook collapse: can I get compensation?

With 150,000 British holidaymakers awaiting repatriation and hundreds of thousands more facing uncertainty about future travel plans, the FT has published a comprehensive guide on whether they are eligible for compensation.

Read the story here.


Blame game begins

As the final Thomas Cook flight touched down in Manchester on Monday morning, a bitter blame game erupted as to who was responsible for the collapse of the world’s oldest travel group, write the FT’s Alice Hancock and Daniel Thomas.

Banks, bondholders, management and the group’s largest shareholder, China’s Fosun, have all come in for criticism.

Read the FT’s analysis here.


That’s a wrap

Thank you for following our live blog. You can catch more of the FT’s coverage here.