The collapse of "Thomas Cook" .. Why went bankrupt the oldest tourist company in the world ?!

When Lee Grant and Laura Thoron of Swindon finally decided to marry, they planned a wonderful tour program that would ensure they lived the most beautiful days of a lifetime. The plan is for both to leave for Cyprus on Sunday, 29 September, to prepare for their wedding there on October 4, which will be attended by more than 60 relatives invited by air travel through the prestigious Thomas Cook cruises. Indeed, a large sum for these trips was estimated at £ 80,000.

The plan, almost two years old, faded in one moment when Thomas Cook was suddenly declared bankrupt on Monday (September 23rd) and declared bankrupt, followed by a halt to most of its world-class tourist trips. Thousands of airport passengers and hundreds of thousands of flights have been canceled, including Grant and Thuron's wedding trip, which will certainly not be able to provide alternatives to their plan in a few days, and worse, they will often not be able to recover the large amount they paid several months ago. (1)

What's going on, Thomas Cook?

Founded by Thomas Cook in 1841 in the UK, the company has grown into one of the UK's most influential global travel agents, becoming a travel and tourism giant that runs dozens of hotels, resorts and airlines around the world. Over 19 million passengers per year. The news that Thomas Cook collapsed and declared bankruptcy after 178 years of global superiority in the industry was a surprise news for the company's dealers, but it was certainly not surprising to the industry, but perhaps a normal news and expected.

The direct cause of a company's bankruptcy is the same as that of any other company: the accumulation of debt. Thomas Cook's accumulated debt amounted to £ 1.7 billion, which led the company to enter into a severe crisis, which demanded a loan of £ 900 million to pay its dues to hotels and other services. It then returned and requested an additional loan of £ 200 million. He did not respond, which led to bankruptcy on the morning of Monday 23 September after years of financial default and an attempt to avoid the inevitable bankruptcy.

The company, which is expected to liquidate its assets now, employs about 9,000 employees in Britain only, and more than 21,000 employees around the world are scheduled to be fully laid off after the bankruptcy declaration, while the company now has more than 600 thousand clients who are vacationing in Outside, it has led to a global confusion at airports, including some 150,000 British agents stalled in different parts of the world unable to return. This overcrowding has led the British Civil Aviation Authority to launch the largest repatriation campaign for British citizens from abroad in peacetime history. (2, 3, 4)

Arab Spring and climatic fluctuations

Losses are the direct cause of this massive collapse in a long-standing company nearly two centuries old, and the losses that led the company to enter into a vicious cycle of debts, which it was forced to reach a level where the big companies and banks started reluctant to venture to lend them, and then find a solution. The latter declares bankruptcy and begins the liquidation procedure for the assets of the company, to start selling them whole or selling them on parts.

The causes of these losses are numerous, beginning with the major global changes in the political and environmental climate that took place at the beginning of the current decade and which were on the verge of collapse, which they could hardly avoid at the time. With the outbreak of the Arab Spring revolutions at the beginning of the decade, Thomas Cook suffered painful blows by canceling a large number of flights to the Middle East in important tourist countries such as Tunisia, Egypt, Turkey and other countries that were hosting European tourists, and turned it for a long time " No Go Zone " in the tourist sense for several years. These events followed Iceland's famous volcano, which led to tremendous changes in the itinerary in northern Europe, which also dramatically impacted the company's revenues. However, the company survived a £ 200m loan at the time.

With Thomas Cook overtaking this blow and being able to schedule its debts in 2013 with a fully repaid roadmap in 2020, subsequent years have proven that the old company is suffering more collapses and does not seem on the horizon to be able to repay its debts as it once was. It would even ask for more loans to add to its accumulated debt for several years.

Later, the Brexit dossier was a devastating political blow that greatly affected the performance of the already collapsing company. Chairman Peter Funk blamed the Brexit agreement for Brexit for causing the company to sink more debt and incur significant losses. Because the company's customers postponed their flights for long periods to consider what will be the case regarding the Brexit, which led to additional bleeding losses on the already injured company. (2, 3, 5, 6)

The rules of the game change .. and the mental does not change

Since Thomas Cook was hit at the start of the decade, several executives have vowed to restructure and modernize the company to cope with major changes in the travel and tourism market. The first of these challenges was the dramatic decline of the traditional travel and ticketing agencies, and their replacement by means of fast online booking without referring to an intermediary in charge of the booking process and the control of flight programs.

A touching word for the captain of the last flight of Thomas Cook, farewell in Manchester

Initially, Thomas Cook kept its branches to book flights and tickets, claiming that customers still needed to go to their stores to meet face-to-face booking staff, but over time it turned out to be a failed policy. Thomas Cook has already made the decision to reduce the number of stores it has to communicate with the public and rely on the Internet, but even with this new policy has kept hundreds of stores, which cost them a continuous bleeding losses, while adversaries make significant gains and take large stakes in Markets.

With 550 stores on major streets and costing rents, salaries and maintenance costs, the company's competitors have been focused on developing their digital booking, travel and travel services, although these companies do not have full airlines such as Thomas Cook or specialized hotels. In fact, these factors increased Thomas Cook's expenses, while competitors enjoyed better flexibility in communicating with hotels, resorts and airlines to prepare better holiday programs. (2, 3, 5, 6)

Why do you charge these millions when you are bankrupt ?!

With the collapse of such a prestigious British company, it was only natural that a question could arise: why did the British government not intervene to help the company rescue it from sinking instead of letting it fall under debt? The first official answer was British Business Secretary Andrea Ledsom, who explained the British government's failure to provide a financial aid package to rescue Thomas Cook that the government saw as a waste of taxpayers' money on trade that did not meet the needs of its customers.

The minister added that even if the government had contributed £ 200 million - the amount the company had requested to save it from drowning - the fact that this amount would have been postponed from the company's declaration of bankruptcy for a very short period will not exceed two weeks, as an amount to pay a huge debt service worth 1.7 billion pounds Sterling, so providing an aid package would be a waste of public money.

But the strongest statement about the company's bankruptcy came from British Prime Minister Boris Johnson in New York, where UN General Assembly meetings are held, when he was surprised that senior officials of the troubled Thomas Cook company were bankrupted before the bankruptcy of millions of dollars. He wondered: I have a lot of questions at the beginning of whether it is true that the directors or any officials, whoever they are in the board of directors, get these huge amounts, while their company collapses like this?

While Johnson was very interested in controlling tourism companies in the face of such crises, his statement was a direct indication of the British government's refusal to rescue Thomas Cook and the suggestion that the company's management was not so competent to lift it out of its crisis. To start investigations with company officials, especially with reports proving that from 2007 to today three executives have received huge salaries totaling £ 36 million. (7, 8, 9)

The bankruptcy of one company causes an international tourism crisis

The bankruptcy of Thomas Cook was more than a bankruptcy of a travel and tourism giant, but it also had a resounding impact on global tourism and transport. Greece has been one of the most bankruptcy countries in the world, and some economic papers have even reported that the bankruptcy of Thomas Cook is one of the worst crises Greece has faced since its financial crisis a few years ago.

Greece, where more than 50,000 tourists were suspended after the company stopped its flights, depends heavily on tourism revenues, and was considered the third largest tourist destination of the company, and even contributed to the transfer and arrangement of tourist trips for more than 2.8 million tourists in 2018 alone, which is About 15% of the total tourists who came to Greece during this year, as well as the company has 4 hotels in Greece in its name. According to some Greek tourism estimates, the news of the company's bankruptcy announcement will cause heavy losses to the tourism sector estimated at 300 million euros on average. (10, 11)

As for Egypt, after the bankruptcy of the company was canceled tourist bookings for more than 25 thousand tourists who were scheduled to come during the coming period, and the agent of the company "Thomas Cook" in Egypt that the bankruptcy of the company will undoubtedly negatively affect the Egyptian tourism as it is expected to be affected At least 150,000 tourists per season, which means 300,000 tourists throughout the year if the situation is not remedied globally. (12, 13)

But the crisis has not only depended on the traditional travel and tourism sectors, but has also extended to sports, especially the world's most watched football. With the bankruptcy and freezing of its shares on the London Stock Exchange, many of the big European fans are facing a crisis to book their overseas trips to encourage their teams this season, especially since the company has a strong presence in the strongest European leagues and has been associated with many partnerships with major clubs. This has prompted many clubs such as Manchester United, which was one of the sponsors of Thomas Cook in his golden periods, as well as Liverpool to issue statements vowing to solve any problems in the transfer of fans for foreign games. (14, 15)

In the end, Thomas Cook's collapse did not come day and night, and she spent her last ten years in the moribund period that ended in her death in September 2019, for many reasons, ranging from mismanagement and inability to cope with market changes. The high costs they incur, as well as other reasons beyond their political, environmental and economic backlog, have all led to the collapse of one of the oldest and oldest tour operators in history.