Thomas Cook Shuts Down

https://www.wsj.com/articles/thomas-cook-enters-compulsory-liquidation-11569206090?mod=rsswn

by kamaraju • 7 years ago

35 53 7 years ago

busterarm5• 7 years ago

Sixth airline to shut down in the last 12 months.

I think the airline part of their business was pretty minor, only a few aircraft, and they were considering selling it anyway. It's not really a story about an airline shutting down.

meristem2• 7 years ago

94 aircraft.

glofish3• 7 years ago

I wonder how many of Europe's super cheap airlines are losing money.

If more fail there might be a domino effect as so many places have come to rely on tourism.

noahwitt2• 7 years ago

The long haul lCCs are. Ryan Air and Easy Jet make money, but they're in a very different space than WOW, Iceland, Norwegian, ETC. The Story of thmas cook is more complicated too as they were a travel agency as well.

Ahwleung• 7 years ago

Wouldn't the failure of competitors and decrease in available flights result in the opposite? The surviving economy airlines will have more demand, higher prices, and will do better as a result?

Disclaimer: I have no knowledge or expertise in this field other than being subscribed to Wendover Productions.

HenryBemis• 7 years ago

Ryanair and Wizzair are notorious to make profit out of every ticket. They live to NOT lose money. Yes some tickets do sell for £5 and some sell for £250 or more, depending the date/time you buy it.

My shock is how companies like Thomas Cook manage to survive by constantly selling below cost just to keep alive. In my mind this is just another Uber, it only stays alive because people just keep throwing money at it. I wouldn't be surprised if TUI, Itaka, and others follow suite.

I am always shocked to see their prices for a 5-6-7 day trip, at a fraction of what I would have paid. I do know that scaling reduces prices, but well.. apparently not really.. like the PIIGS economies the moment lending froze, Thomas went under.

PeterStuer2• 7 years ago

They were never profitable in an operational sense and just coast on very generous public subsidies.

danb1974• 7 years ago

They abruptly shut down overnight leaving a very large number of people stranded away from home.

Now the government has to pay 150 million to bring them home.

Why not do a gracefull shutdown...???

MiscIdeaMaker99• 7 years ago

Such as?

chrisseaton4• 7 years ago

They abruptly shut down overnight

Everyone knew this was coming for months.

Why not do a gracefull shutdown...???

Why would creditors allow their money to be used for that?

msbarnett3• 7 years ago

In this case a large number of their creditors, indeed the ones that should have highest priority, are the people who are currently stranded because they’ve already paid the company for travel they are now not going to receive.

noahwitt2• 7 years ago

They would not be able to pay their bills for fuel labor etc. In most countries, if the airline collapses your just SOL.

busterarm5• 7 years ago

European bankruptcy law doesn't allow them to do a graceful shutdown. The company is forced to stop operations.

That's the major difference between American and European bankruptcies.

skrebbel2• 7 years ago

Could you elaborate? Why not?

groestl• 7 years ago

That's just not true (source: worked for a bankrupt European company once)

labster• 7 years ago

Wow, harsh. If we had that in the US, half of California would be without electricity and heating fuel for months, given the current state of PG&E.

icebraining• 7 years ago

Now the government has to pay 150 million to bring them home.

Part of that will be paid from the Air Travel Trust Fund: https://www.caa.co.uk/ATOL-protection/Air-travel-trust/About...

hartator• 7 years ago

Other government officials said the cost of the repatriation effort was lower than the cost of keeping Thomas Cook in business.

Not sure why it’s the government issue to issue flights to people.

jey• 7 years ago

It's a mandatory insurance program run by the UK government: https://en.wikipedia.org/wiki/Air_Travel_Organisers'_Licensi...

CodeBeater4• 7 years ago

Insured or not, most other countries will find a way to bring you back into your country of residence, usually by securing you a seat that's not available to the general public (like a jump or a stewardess seat).

I'm just not entirely sure how they would go about doing it in such a large scale if no such insurances were in place.

CodeBeater4• 7 years ago

It leaves a bad taste in my mouth too, but at least that's taxpayer money going directly back to the taxpayer.

callahad• 7 years ago

Even better: it's not actually taxpayer money. The repatriation is funded by a mandatory £2.50 surcharge on all package holiday bookings that's been in place since 1973. https://www.caa.co.uk/ATOL-protection/Consumers/About-ATOL/

slovenlyrobot• 7 years ago

Repatriation is paid for by the travel industry, the government have nothing to do with it

msbarnett3• 7 years ago

It’s a government issue specifically in this case because the government operates a mandatory fund that travel agencies pay into which covers the cost of repatriation efforts if the travel agency collapses, and in the bigger picture because having thousands of citizens stranded abroad with potentially no financial means to repatriate themselves is, y’know, bad.

https://www.caa.co.uk/ATOL-protection/Consumers/About-ATOL/

ATOL (which stands for Air Travel Organiser’s Licence) is a UK financial protection scheme and it protects most air package holidays sold by travel businesses that are based in the UK. The scheme also applies to some flight bookings, usually those where you book flights (including UK domestic flights) but do not receive your tickets immediately.
ATOL was first introduced in 1973, as the popularity of overseas holidays grew. After a number of high profile travel business failures left people stranded overseas the UK Government realised consumers required protection when their travel providers fell into difficulties. ATOL currently protects around 20 million holidaymakers and travellers each year.
If a travel business with an ATOL ceases trading, the ATOL scheme protects consumers who had booked holidays with the firm. It will support consumers currently abroad and provide financial reimbursement for the cost of replacing parts of an ATOL protected package.

RonaldSchleifer3• 7 years ago

On one hand I agree that it shouldn't be because government should require that both, sufficient reserves exist to deliver on contracts to consumers, and that consumers always have the first priority on any kind of claims against a bankrupt company. If, as a professional firm or even investor, you invested in a company; it should be considered part of your professional duty and due diligence that you make smart decisions and suffer the consequences for your actions ... not naive consumers.

On the other hand though, in the absence of and the externalization of the costs by not holding corporations and professionals responsible for their actions, it can be argued that it falls into the common good scope of government to provide such emergency services that are generalizable across the population and from which everyone will equally benefit and therefore can also not be extracted.

There is also an argument to be made though that this has been known and Thomas Cook has been on the skids for years now, even though a layperson really can't be expected to know that when they dish out their life savings to book family vacation of a lifetime.

Again, there reckless corporations need to be held to the fire on these matters, which is EVEN MORE the responsibility of government ... the core responsibility at that ... so that it doesn't have to do these types of things because the reserves existed that would allow emergency travel or relocation or whatever is needed to meet contractual obligations.

amyjess• 7 years ago

Other discussion on this subject: https://news.ycombinator.com/item?id=21045550

Porthos9K• 7 years ago

As a New Yorker, I had no idea Thomas Cook had their own airline. I thought they dealt mainly with currency exchange for tourists.

amriksohata• 7 years ago

I remember going to travel agent branches in the town centre with parents, but now it's all online. Thomas Cook are overpriced and aimed at older people who aren't able to use the internet to shop around. Their business model was not going to last.

mmahemoff• 7 years ago

Per The Guardian, it's largely due to changes in consumer behaviour - more people booking city breaks directly, less people booking package holidays via travel agents [1]. Global warming may have caused more people to prefer to stay at home in summer. That may have been the tipping point along with Brexit causing uncertainty and a lower pound.

1. https://www.theguardian.com/business/2019/sep/23/thomas-cook...

RonaldSchleifer3• 7 years ago

When it comes down to is, the failure of Thomas Cook comes down to a single thing, the inability to have any kind of forward looking strategy and ability to adapt to changes.

This story has been told at least dozens of times now in the last two decades in particular and ever time it is some combination of a scapegoat excuse and ... of course, climate change done done it! ... when in reality it was an utter failure of leadership to not notice the shifting enemies on the battlefield or being able to adapt to those changes ...

Sears/Kmart, WalMart (even though they are trying), all the book stores (even though B&N is putting up a good fight), ToysRUS, Taxi services, etc.; even, arguably, the whole US economy that is now realizing that "holy shit, maybe we shouldn't have bet the farm and slaughtered that golden goose so the ruling class or fools could get rich quick by selling their own people out to China/India.

They are all cautionary tails of hubris ... nothing more, nothing less ... regardless of how little people want to learn from them.

LaundroMat• 7 years ago

It's not only the failure to adapt to changes or hubris that is to blame. Sometimes it's simply greed (see for instance https://news.ycombinator.com/item?id=16904564)

rvz• 7 years ago

Well according to the current climate change crisis, that's one less airliner heating up the planet. This sacrifice is perhaps a benefit to saving the planet anyway.

Fantastic news for climate change activists I suppose.

skohan• 7 years ago

I think it's tenuous at best to assume an airline closing will result in less total air travel.

PeterStuer2• 7 years ago

Only if you assume that Thomas Cook customers will not just switch to one of the very many other oversubsidized airlines for their travel consumption.

EpicEng• 7 years ago

Assuming the people who would have flown on that airline won't chose another option. Seems like a big (and incorrect) assumption.

sahila• 7 years ago

Not at all and I can't imagine "climate change activists" seeing it in that light (and really, we should all be activists at this point). More likely, the demand for traveling will remain unchanged but suppliers will.

happyweasel• 7 years ago

Fantastic news? I would rather concentrate on the other 96.5%

"The IPCC has estimated that aviation is responsible for around 3.5 percent of anthropogenic climate change".

(Source: https://en.wikipedia.org/wiki/Environmental_impact_of_aviati...)

RonaldSchleifer3• 7 years ago

Is that the climate change activists that fly private planes around the world to exotic hot locations where new facilities were built with fully air-conditioned spaces where they eat $10,000 steaks while lecturing the commoners about eating meat and climate change?

Thomas Cook Shuts Down

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