- September 24, 2019
- Posted by: @webmaster
- Category: Current Affairs News
Why in News?
Thomas cook Travel Agency, the world’s oldest travel agency collapsed into liquidation after the rescue talks failed to secure $250 million in contingency funding, leaving many thousand tourists stranded without a return ticket back home.
About Thomas Cook
The travel agency founded way back in 1841 was one of the world’s best known holiday brands. It was the leading integrated travel and travel related financial services company offering a broad spectrum of services that include Foreign Exchange, Corporate Travel, MICE, Leisure Travel, Insurance, Visa & Passport services and E-Business.
The Travel Agency Giants were facing stiff challenges from various factors including the uncertainty over Brexit, ineffective mergers and increased competition from small and upcoming travel agencies. We will look at it one by one:
- One of the most pressing reason for its liquidation was its merger with MyTravel, a U.K based package travel company way back in 2007. The merger was done more in a hope of reviving the ailing health of the company. But all efforts went futile. Thomas Cook ended up with huge debts that proved way beyond their reach as MyTravel, as a company has made profit only once since 2001. The Company recorded a loss of almost $1.85 million coupled with a steep drop in its sale.
- The ever increasing uncertainty over the Brexit deal did not help their cause either. The original deadline of the deal was 29th March 2019 but had materialized till now. Such a situation is making nervous in terms of booking for holidays.
- The Agency also faced tough competition from its rival i.e. Jet2Holidays which put their profits under immense stress.
There was a hope that Thomas Cook could recover from its losses after it had agreed to a $1.1 billion rescue deal with its biggest shareholders ‘Fosun’ (Chinese Investment Company) but the talks failed and Thomas Cook was declared bankrupt with immediate effect.
Impacts on the Holidaymakers
- The recent developments have left numerous British travelers stranded in different parts of the world without a ticket back home.
- While an estimated 150,000 Britons are affected by Thomas Cook’s collapse, the company has a further 350,000 to 450,000 customers abroad who are awaiting to board flights back home.
- The company hoisted almost 9,000-10,000 employees in U.K itself who are now lest unemployed.
- For now, Thomas Cook’s Indian, Chinese, German and Nordic subsidiaries will continue to trade as normal. This is because, from a legal standpoint, they are considered separate to the UK parent company and are not under the jurisdiction of the UK’s Official Receiver. They do, however, share services – such as aircraft and IT – with their parent company and will need to strike rescue deals in the coming weeks to keep trading. If they fail, a further 350,000 to 450,000 customers could be affected.
The collapse has left the U.K Government faced to pull out one of the biggest peacetime rescue acts. Subsidiary flights and planes have been deployed to bring back the holidaymakers home. But it still has to be seen as to how many more days will it take to bring back normalcy from the chaos.