It just goes to show that nobody is too big to fail these days. Thomas Cook, one of the largest travel operators in the world, have ceased trading on Monday after a last-ditch bid to save the company fell agonisingly short. The company were declared bankrupt at 2:15 earlier this morning.
This is the sombre message currently plastered across their now-defunct websites:
“Thomas Cook UK Plc and associated UK entities have entered Compulsory Liquidation and are now under the control of the Official Receiver. The UK business has ceased trading with immediate effect and all future flights and holidays are cancelled.”
“A dedicated support service is being provided by The Civil Aviation Authority to assist customers currently overseas and those in the UK with future bookings. Please visit thomascook.caa.co.uk for further information.”
Thomas Cook statement
The effects and the ripples will be felt far and wide. Around 600 000 tourists are currently on holiday thanks to a Thomas Cook package. Hundreds of high-street stores are set to close, and fuel producers could be left severely out of pocket after the airline failed to keep its head above water. But what does that mean for us in South Africa?
Well, first and foremost, we’ve lost a direct route to the UK. Thomas Cook had previously operated flights from London to Cape Town during the busy summer season. The route often proved to be cheaper than competing flights, but its popularity simply isn’t enough to keep the company afloat.
Secondly, there will be job losses in South Africa. It has been well-documented that Mzansi is home to several Thomas Cook call centres and operational offices. The firm have several training programmes in SA that are all set to vanish along with the 180-year-old company itself.
Around 21 000 employment positions worldwide have been lost, and a fleet of 34 planes will now be sold off to other airlines. As we are out of season in South Africa, it’s understood disruption is at a minimum for travellers to this country. We are awaiting comment from Thomas Cook to establish how many people have actually been affected here.
Why did Thomas Cook collapse?
Financial mismanagement has been rife at the company. But they fell victim to their own reputation. When news of their cash-flow problems went public, a raft of investors and creditors started knocking at the door, demanding payment. This pile-up of debt collection left Thomas Cool severely out of pocket.
Multi-million-pound bonuses for bosses and an inability to cope with the changing landscape of tourism – including political upheaval and a competitive online market – sadly accelerated the liquidation.
Has Brexit caused Thomas Cook to go bust?
No. Market uncertainty might have played a role here, but the blame lies mainly with the firm itself.
How will holidaymakers get home?
The British government has already started repatriating their customers stranded aboard, footing the bill for planes to go and rescue around 150 000 tour operators. Other countries are expected to follow suit, and the global effort could cost hundreds of millions, if not billions of pounds.