Thomas Cook collapses, leaving thousands of travelers stranded

[Willbridge]

Apparently, even though Thomas Cook's German subsidiary - Thomas Cook Gmbh, has filed for bankruptcy protection in Germany, they intend to continue operations. They are separate from the mother company, and probably will not be eventually affected by the liquidation of the British company.

That is somewhat like what happened with Woolworth's and illustrates the differences in national bankruptcy laws. The attached photo shows a sign that shocked American tourists in 2018.

 

[Anderson]

The British system is quite different from the US. Some years ago while discussing the US system with UK bankruptcy practitioners , I mentioned that the US system protects the debtor. They were astonished and exclaimed:”Why would you do that?”

I responded by reminding them that a lot of us were fleeing the British debtor prisons!

Watch for the examination of the Cook principals. They are serious exams under oath and it is not unusual for them to result in criminal charges.

The irony is that I think the US system probably does a better job of protecting the creditors by protecting the debtors. That is to say that by trying to arrange for companies to keep operating (as opposed to liquidating), there's a better chance of the creditors walking away with something.

Of course, the UK also gave us the "recruit to dilute" scandal at Lloyds...

 

[Anderson]

Reading some further coverage, I think there's a good chance that at least one aspect of the "package tour" business faces a significant overhaul: Apparently a lot of hotels are rather up the infamous creek due to non-payment from Thomas Cook going under (though I cannot tell for sure if this is a short-term [cash flow] or long-term [total default] issue). If it is the latter, I would not be surprised to see legislation emerge in some places (Spain leaps to mind) requiring package tour companies to take out some equivalent of a "bid bond".

 

[Rover]

Apparently, even though Thomas Cook's German subsidiary - Thomas Cook Gmbh, has filed for bankruptcy protection in Germany, they intend to continue operations. They are separate from the mother company, and probably will not be eventually affected by the liquidation of the British company.

Also, Thomas Cook in India is a separate concern, and is not affected by the UK failure.

 

[jis]

It looks like like many things British these days, Thomas Cook UK - the mother ship was a hot mess. They had pulled back operating cash reserves from their offshore subsidiaries into the mother ship and all that was frozen when they filed for liquidation. That is part of the reason that the offshore subsidiaries now set free had to find financing to cover operating cash, and also seek bankruptcy protection more so from the mother ship perhaps than anyone else. A pretty odd situation it would seem. Many of the offshore subsidiaries appear to be quite capable of operating successfully on their own, set free from the mother ship.

Discussion on airliners.net suggest that the Thomas Cook Airlines folks in UK are ticked off that they are getting liquidated while the Germans are helping Condor survive and potentially thrive. There are conspiracy theories flying in proper British style wherein the failure of Thomas Cook UK is everyone else's fault, but not their own.

 

[The Journalist]

I've seen several Tweets to the effect of "The Germans are saving THEIR workers' jobs (Condor) but our government won't save ours!" But it makes sense that the nuance of "that company is actually viable and they'll almost certainly be able to pay back the loan they're getting" is lost when one finds themselves suddenly jobless.

 

[user 6862]

The general basic view in the UK is the problems stemmed from being unwilling to modernise and change to current market demands as long as 30 years ago. They had a very loyal clientele which gave them a soft landing in troubled times. Add to that the ridiculous amount of retail space they occupied, poor management, own airlines, and large bonuses being paid until recently and it was a disaster waiting to happen.

That the government would not step in was based on the assumption that the company was a basket case and not to be saved without a gigantic overhaul, plus the fact we have a government that is tightly controlled by a small hard right wing group who's opinion is 'if there is no return there is no public money available'.
Maybe another government (Conservative or Labour) would have tried to save part of the group but we'll never know.

But it still came back to not modernising while retaining their 180 years of expertise and history.

 

[adamj023]

I wasn’t surprised at all by Thomas Cook’s failure. The UK market is highly competitive. Travel agent based airlines always had a disadvantage. UK has Ryanair and EasyJet. A travel agent based airline like Thomas Cook which has to compete against low cost competitive and legacy airlines never fit in.

 

[The Journalist]

As we all predicted, Condor has been bought by *checks notes* uh, LOT Polish Airlines. Interesting!

 

[flitcraft]

Actually, the management group in charge of LOT has had a lot of success in pulling LOT from the brink of insolvency to being a healthy carrier. Word is that they don't plan to change anything about Condor's operations, at least in the short term. Since both Condor and LOT use Lufthansa's Miles and More frequent flyer program, this seems a good fit. Of course, we'll see happens as the acquisition process gets settled, but I think Condor's transatlantic routes and emphasis on Western Europe via their Frankfurt hub complements LOT's Warsaw and Budapest hubs.