Thomas Cook falls into liquidation as rescue talks collapse
Thomas Cook has collapsed into liquidation after failing to find the £1.1bn required to keep it afloat.
Talks collapsed overnight to sink the holiday firm, leaving around 150,000 British holidaymakers stranded abroad.
Read more: Thomas Cook teeters on the brink as 11th hour talks look set to fail
The government will now charter dozens of planes from as far as Malaysia to bring customers home over the next two weeks.
It also throws into doubt the future of 21,000 staff worldwide, and 9,000 in the UK, as all Thomas Cook stores shut up shop.
Peter Fankhauser, the Thomas Cook chief executive, called the collapse “a matter of profound regret” and apologised to the firm’s “millions of customers, and thousands of employees”.
He added: “Despite huge efforts over a number of months and further intense negotiations in recent days we have not been able to secure a deal to save our business.
“It has been my privilege to lead Thomas Cook. It is deeply distressing to me that it has not been possible to save one of the most-loved brands in travel.”
With the company in compulsory liquidation, the Civil Aviation Authority (CAA) warned customers with holidays booked that their flights will not be operating.
Prime Minister Boris Johnson lamented the struggles stranded customers now face, and added: “One’s driven to reflect on whether the directors of these companies are properly incentivised to sort such matters out.”
“It’s a very difficult situation and obviously our thoughts are very much with the customers with Thomas Cook, the holiday makers, who may now face difficulties getting home,” Johnson added.
Transport secretary Grant Shapps said: “The government and CAA are working round the clock to help people. Our contingency planning has helped acquire planes from across the world – some from as far away as Malaysia – and we have put hundreds of people in call centres and at airports.
“But the task is enormous, the biggest peacetime repatriation in UK history. So, there are bound to be problems and delays. Please try to be understanding with the staff who are trying to assist in what is likely to be a very difficult time for them as well.”
Business secretary Andrea Leadsom has asked the Insolvency Service to fast-track an investigation into Thomas Cook’s collapse.
Lenders claim they were ‘extremely supportive’
Lenders including RBS and Lloyds Banking Group released a statement overnight saying they had been “extremely supportive”.
“Unfortunately, and notwithstanding the efforts of all stakeholders, the £1.1bn funding requirement to adequately recapitalise Thomas Cook has ultimately proved too significant,” they said.
“The lenders providing finance facilities to the Group have been extremely supportive stakeholders, including through two periods of financial distress and have stood behind Thomas Cook over the past 12 months, a period where the Group saw cash outflows of about £1bn, maintaining that position over the crucial and busy summer holiday period.
“Obviously, the lenders are deeply disappointed that it has not proved possible to rescue Thomas Cook. In partnership with other stakeholders, the lenders worked tirelessly to examine all options within the timeframe required.”
Meanwhile the government has launched a webpage to advise on customers’ rights and protections while the Insolvency Service will prepare redundancy payments for staff.
‘Moral hazard’ for government to save Thomas Cook
Johnson said Thomas Cook had asked for a £150m government bailout to save it from bankruptcy.
But he said that paying the sum would have created “a moral hazard in the case of future such commercial difficulties that companies face”.
“I do think that we need to look at ways in which tour operators, one way or another, can protect themselves from such bankruptcies in future.
“Clearly the systems that we have in place to ensure that companies like Thomas Cook don’t in the end come to the taxpayer for help.”
Extra £200m request a step too far
Fankhauser added that Thomas Cook had mostly agreed a £900m rescue deal with majority shareholder Fosun, but a last-minute request from lenders for another £200m sank the company.
“Although a deal had been largely agreed, an additional facility requested in the last few days of negotiations presented a challenge that ultimately proved insurmountable,” he said today.
“I would like to apologise to our millions of customers, and thousands of employees, suppliers and partners who have supported us for many years.”
Thomas Cook pleaded with lenders to slash their £200m demand in frantic negotiations last night, according to Sky News.
Read more: Thomas Cook on the brink of collapse: How did it come to this?
The extra cash was supposed to help Thomas Cook through the difficult winter months.
Meanwhile the travel agent approached credit card companies to ask them to release £50m of cash they were holding as collateral against Thomas Cook holiday bookings, one source told Sky.
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