Vacations upended, jobs lost as UK’s Thomas Cook collapses

LONDON – Hundreds of thousands of travelers were stranded across the world Monday after the British tour company Thomas Cook collapsed in the middle of the night, immediately halting almost all its flights and hotel services and laying off its employees.

Britain’s Civil Aviation Authority announced about 2:30 a.m. that Thomas Cook, a 178-year-old company that helped create the package tour industry, had ceased trading. It said the firm’s four airlines will be grounded, and its 21,000 employees in 16 countries – including 9,000 in the U.K. – will lose their jobs.

The collapse of the firm is expected to have sweeping effects across the European and North African tourism industries and elsewhere, as hotels worry about being paid for tourists they have already served and confirmed Thomas Cook bookings for high-season winter resorts suddenly are cancelled.

Overall, about 600,000 people were travelling with the company as of Sunday, though it was unclear how many of them would be left stranded, as some travel subsidiaries were in talks with local authorities to continue operating. Thomas Cook says it served 22 million customers a year.

The British government was taking charge of getting the firm’s 150,000 U.K.-based customers back home from vacation spots across the globe, the largest repatriation effort in the country’s peacetime history. The process began Monday but officials urged patience and warned of delays.

A stream of reports Monday morning hinted at the extent of the travel chaos: some 50,000 Thomas Cook travelers were stranded in Greece; up to 30,000 stuck in Spain’s Canary Islands; 21,000 were left in Turkey and 15,000 were in Cyprus. Airports saw queues of Thomas Cook travelers lining up for other ways to get home.

Some people took the news in stride. Bengt Olsson, who was traveling in Cyprus from Sweden, said there were worse places to be stranded.

“It’s nice to stay here, it’s warm,” he said.

The reality was far harsher for the Thomas Cook workers who lost their jobs overnight.

“The staff have been stabbed in the back without a second’s thought,” said Brian Strutton, head of the British Airline Pilots’ Association.

An estimated 1 million future Thomas Cook travelers also found their bookings for upcoming holidays canceled. Many of them are likely to receive refunds under travel insurance plans but had no idea when they would get their money back.

Lewis and Amy Bromiley, from Manchester, England, had paid 7,000 pounds ($8,700) for a January honeymoon in the Maldives.

“Me and my wife are devastated,” said Bromiley, 25. “We’ll have to wait for the refund, which could take months.”

The company, which began in 1841 with one-day train excursions in England, grew to have travel operations around the world but has been struggling for years due to competition from budget airlines and the ease of booking low-cost accommodations through the internet.

Adding to its crushing debt burden, Thomas Cook operated a fleet of 105 airline jets and had extensive real estate costs, including about 550 travel shops on major streets across Britain and 200 hotels in sun-drenched countries.

“The growing popularity of the pick-and-mix type of travel that allows consumers to book their holiday packages separately, as well as new kids on the block like Airbnb, has seen the travel industry change beyond all recognition in the past decade, as consumers book travel, accommodation, and car hire independently,” said Michael Hewson, chief market analyst at CMC Markets.

Terror attacks in recent years also hit tourist destinations like Egypt and Tunisia, hurting business, as did heat waves in Northern Europe, which encouraged people to vacation in their own countries.

Things got worse this year, with the company blaming a slowdown in bookings on the uncertainty over Brexit, Britain’s impending departure from the European Union that is scheduled for Oct 31. A drop in the pound also made it more expensive for British vacationers – one of the company’s key markets – to travel abroad.

Thomas Cook had said Friday it was seeking 200 million pounds ($250 million) to avoid going bust and held talks over the weekend with shareholders and creditors in a failed attempt to stave off collapse.

CEO Peter Fankhauser read a statement outside the company’s offices before dawn Monday saying he deeply regrets the shutdown.

“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,” he said. “I know that this outcome will be devastating to many people and will cause a lot of anxiety, stress and disruption.”

British authorities said they had chartered dozens of aircraft to fly customers home free of charge over the next two weeks, and hired hundreds of people to staff call centers and airport operations centers.

British Prime Minister Boris Johnson, who was traveling to New York for the U.N. General Assembly, said the government was right not to bail out the company, arguing that bailing out Thomas Cook could have led other firms to expect the same treatment.

“We need to look at ways in which tour operators one way or another can protect themselves from such bankruptcies in future,” Johnson said.

Most of Thomas Cook’s customers from Britain are protected by the government-run travel insurance program, which makes sure vacationers can get home if a British-based tour operator fails while they are abroad.

In Germany, the government was considering a request for a bridging loan from Thomas Cook’s unit there, the airline Condor. The subsidiary is still flying but would not say how much financial help it was asking for. In 2017, Germany provided a loan to prevent the immediate grounding of insolvent Air Berlin, but a government spokesman said Monday that every case is different.

Thomas Cook’s collapse is also a blow to the many companies in vacation resorts that have long relied on it, including the 3,150 hotels it does business with.

In Spain’s Canary Islands, a favored year-round destination for Europeans, the association of hotels said it feared an economic hit, especially from the loss of the winter holiday bookings. The Spanish government was holding meetings Monday with regional authorities to assess the damage.

In Tunisia, the TAP news agency said the tourism minister intervened after reports that some Thomas Cook tourists in Hammamet were locked into one hotel and “being held hostage” as hotel staff demanded they pay extra.

The government said the situation was resolved and Thomas Cook clients would not be prevented from leaving the country.