Hindsight is, of course, a wonderful thing, but I wonder just how many tourism industry observers had any real idea of how extensive the debts owed by the collapsed Thomas Cook Group might finally tally.
According to a recent Travel Trade Gazette article, the United Kingdom Official Receiver has reported that ‘Thomas Cook collapsed owing creditors nearly GB Pounds 9 billion’
Of the total liabilities amount, some GB pounds 885 million are owed to trade creditors alone, which included GB Pounds 393 million from their tour operator’s division and GB pounds 448 million from its in-house airline. Holiday customers are owed GB pounds 585 million and employees a further GB Pounds 45 million. That GB Pounds 585 million owed to customers does not include the Civil Aviation Authority’s claim.
‘The bulk of the liabilities, though, rest in GB Pounds 5.7 billion debts arising from other group companies. An additional GB Pounds 1.775 billion is owed to banks and other lenders’.
The receivers have managed to claw back some of this mind boggling debt through the sale of the Thomas Cook Travel high street retail stores to Hays Travel for around GB Pounds 6 million, the airlines slots at various UK airports is, ‘understood to have raised in the region of GB Pounds 36 million to date; and Cook’s intellectual property rights and brand, sold to Chinese travel giant Fosun, for a reported GB Pounds 11 million’.
Other potential saleable assets include Thomas Cook’s call centre, its Peterborough headquarters and aspects of its operations in Scandinavia and central Europe, which have not already been sold.
The receivers report highlighted the affairs of 26 Thomas Cook Group companies and subsidiaries wound up on 23rd September 2019.
‘Additional reports on a further 27 Cook subsidiaries will follow in due course’ the official receiver has said.
The article did not itemize exactly what was the total debt to hotels that were not owed and/or operated by the company.
All sorts of reasons have been expounded, as to why the world’s oldest tour operator failed with such severity, including a change in customer holiday patterns, customer uncertainty arising from Brexit including the initial 29th March departure date which led to UK customers delaying booking holidays in Europe, the summer 2018 heat wave which caused potential customers to holiday at home.
But these were challenges faced by the vast majority of other holiday companies, so what went so dramatically wrong for Thomas Cook?
In reality the company was functioning under a mountain of debt following the merger with a rival tour operator back in June 2007.
As one Guardian journalist so accurately described ‘it is astonishing now to remember that, at the end of 2007, soon after the merger with MyTravel, Thomas Cook thought it was so flush with cash that it could spend GB Pounds 290 million on buying back its own shares’.
Yet, less than four years later, it was already fighting administration.
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