Around 600 of Thomas Cook’s high street stores in the UK have shut down after the travel company collapsed following an unsuccessful rescue bid.
Thomas Cook, the world’s oldest tour operator, ceased trading with immediate effect this morning after failing in a final bid to secure a rescue package from creditors.
Alongside its raft of high street stores, the company’s four airlines have been grounded and its 21,000 employees in 16 countries, including 9000 in the UK, are now unemployed.
Thomas Cook’s collapse also means more than 150,000 British holidaymakers are currently abroad and will need to be repatriated, the Civil Aviation Authority (CAA) said.
“All Thomas Cook bookings, including flights and holidays, have now been cancelled,” the CAA said in a statement.
“There are currently more than 150,000 Thomas Cook customers abroad, almost twice the number that were repatriated following the failure of Monarch.
Thomas Cook’s chief executive Peter Fankhauser said: “Following a decision by the board late last night, the UK Government’s official receiver was appointed in the early hours of this morning, the 23rd of September, to take control of Thomas Cook.”
The move is another devastating blow to the UK’s beleaguered high streets, with the travel agency a familiar presence in many towns and cities. While most travel booking has switched online, Thomas Cook was another footfall driver.
RPA Perspective In a statement, the syndicate of Thomas Cook’s lenders said: “Unfortunately, and notwithstanding the efforts of all stakeholders, the £1.1 billion funding requirement to adequately recapitalise Thomas Cook has ultimately proved too significant.
“The lenders providing finance facilities to the group have been extremely supportive stakeholders, including through two periods of financial distress and have stood behind Thomas Cook over the past twelve months, a period where the group saw cash outflows of about £1 billion, maintaining that position over the crucial and busy summer holiday period.
Thomas Cook had been facing financial difficulties for some time, which it blamed on the increase in shoppers booking holidays online. The company announced in March that it would be closing 21 stores, making 330 redundancies, in a cost saving exercise.
Colliers International estimated that Thomas Cook has a business rates bill of around £12 million a year.
Thomas Cook’s collapse will mean that not only are jobs are at stake, but also local government finances which rely on business rates for their funding, could suffer. Thomas Cook stores are across the UK’s high street, which is already being decimated in the current climate.
John Webber, Head of Rating at Colliers International, said: "Thomas Cook’s predicament mirrors other UK high street shops trying to balance a period of economic uncertainty, a reduction in demand and higher costs.
The Government surely needs to look at how it can help companies like Thomas Cook - by reforming the business rates system so that struggling companies who employ thousands of jobs as well as contributing millions to the public purse are better able to survive today’s brutal retail climate.”
