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2019/09/24 18:44:42
Subject: British Travel Firm Collapses leaving hundreds of thousands stranded
Aye plus its the kind of big name that can sometimes get a government bailout to keep it going. So many who might have been aware might well have thought "well if it goes bad the government might step in.
Heck it generally seems that even with the huge debt the banks weren't making loud noises about a problem when many would have booked and left on their flights. This change around appears very sudden to many. So chances are many who are even quite consumer aware would have got caught out.
Signs might have been on the wall but many/most companies hide the full details for as long as they can so the outward front might appear ok, even if they are still in choppy waters
Overread wrote: Aye plus its the kind of big name that can sometimes get a government bailout to keep it going. So many who might have been aware might well have thought "well if it goes bad the government might step in.
It appears though that the government didn't need to step in, all it needed to do was underwrite the funds. Both the Spanish and Turkish governments had offered to fund the £200m needed (some funded by Spanish businesses) and all they needed to do was for the UK to be security (in effect they take a hit only if it does go bust). However, it appears the UK government wouldn't even do this to try and support the company.
So there was a willingness to try and sustain the company.
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2019/09/24 21:35:02
Subject: British Travel Firm Collapses leaving hundreds of thousands stranded
At the same time this 200million was only to tide it over Christmas. I think the governments worry was that after the Christmas period it would be back to have to bail the company out again. At which point the government gets blasted every time one of the company bosses gets paid or takes a bonus etc...
It might also have been just kicking the can down the pathway and just postponing the inevitable. Especially if the company wasn't looking like it could turn its finances around; doubly so if it was becoming clearer that those in charge were simply milking it for what they could knowing it was a dead duck or that restoration would require investment way beyond what they were capable of raising.
Thomas Cook's German subsidiary has announced it is filing for insolvency in an attempt to save its national brands after the collapse of the UK parent company on Monday.
Almost 100,000 holidaymakers are travelling with the German affiliates and it is not clear what the bankruptcy proceedings will mean for them.
The German government has already granted a €380m (£335m; $420m) bridging loan to the holiday airline Condor.
Condor is 49% owned by Thomas Cook.
The central state of Hesse, where Condor is based, also stepped in to rescue the airline, arguing that it was profitable.
The company said it was "operationally healthy" and the six-month loan was aimed at preventing any "bottlenecks" resulting from its British parent company. The funding will be paid out pending an agreement with the European Commission.
Thomas Cook Germany is also based in Hesse and state premier Volker Bouffier said it was in principle willing to step in to help that company too.
It said that it had long been burdened by the weak Thomas Cook business in Great Britain and by Brexit.
How are European tourists affected?
A total of 600,00 holidaymakers have been caught up in the collapse of the UK company. Many have travelled from the UK but Thomas Cook's empire stretches across Europe and tens of thousands have travelled with its subsidiaries.
Under EU package holiday rules, holidaymakers are protected financially from a company's insolvency as well as having the right to repatriation.
The UK's Civil Aviation Authority has had the task of bringing back more than 150,000 holidaymakers. It repatriated more than 14,000 passengers on Tuesday and was expecting to bring back another 16,500 on Wednesday.
Thousands of Dutch, Belgian and Polish tourists are still abroad, but the biggest group affected outside the UK is from Germany. A spokeswoman said on Wednesday that 97,000 people were currently travelling with the company.
Thomas Cook Germany employs some 2,000 people and has several national brands, including Neckermann, Öger Tours, Air Marin and Bucher Reisen. A thousand people are employed by the company near Frankfurt.
It said it was talking to the German foreign ministry as well as the travel bankruptcy insurer, Zurich, about repatriating customers. Like Condor, it has asked the Hesse state government and the federal government for a bridging loan.
Thomas Cook's Polish subsidiary, Neckermann Polska, has suspended its activities and said it will also file for bankruptcy.
Why has Germany's Thomas Cook filed for bankruptcy?
The German subsidiary believes its brands have a future and is in negotiations with investors and hotel operators to continue in business.
Thomas Cook GmbH said it had been forced to seek insolvency to extricate itself from its (UK) parent company's "financial tie-ups and related liabilities".
"We owe this to our long-standing customers, committed employees and other partners who have supported us so much over the years and in the last difficult weeks," said chief executive Stefanie Berk.
Founded in 1841, parent company Thomas Cook filed for bankruptcy after failing to secure emergency funding of £200m from the UK government.
In the UK, anyone who has bought a package holiday covered by the Air Travel Organiser's Licence scheme (Atol) will have the cost refunded.
Thomas Cook collapse: Your rights explained
However, some customers whose future holidays have been cancelled have seen the price of replacement deals spiral.
How have businesses around the world been affected?
There is concern in countries such as Egypt and Greece that local businesses could be financially impacted by loss of tourism.
The Gambia's government has held an emergency meeting. There is concern that Thomas Cook's collapse will hurt tourism, which provides about a third of the country's GDP
In Egypt, Thomas Cook operator Blue Sky said reservations until April 2020 have been cancelled. The company runs many charter flights from the UK to Sharm El-Sheikh and officials say resorts there will be affected
In Cyprus, the loss for hoteliers and the wider economy is about €50m, according to deputy tourism minister Savvas Perdios. Hotels are owed money for July, August and September, he added
Greek tourism minister Grigoris Tassios has said hotels expect losses on payments from recent months. He said they would attempt to recover money from Thomas Cook in court
In India, Goa's Travel and Tourism Association said that the loss of Thomas Cook is a "big, big, blow to the industry"
Spain's Balearic Islands faces losses running into millions of euros. Thomas Cook has a tax office in Palma with hundreds of employees, and also works with hotels in the Balearic Islands and Canary Islands
Turkey's Hoteliers Federation (TUROFED) has warned that the country could miss out on up to 700,000 tourists a year due to the collapse.
2019/09/26 05:55:50
Subject: British Travel Firm Collapses leaving hundreds of thousands stranded
Overread wrote: Aye plus its the kind of big name that can sometimes get a government bailout to keep it going. So many who might have been aware might well have thought "well if it goes bad the government might step in.
It appears though that the government didn't need to step in, all it needed to do was underwrite the funds. Both the Spanish and Turkish governments had offered to fund the £200m needed (some funded by Spanish businesses) and all they needed to do was for the UK to be security (in effect they take a hit only if it does go bust). However, it appears the UK government wouldn't even do this to try and support the company.
So there was a willingness to try and sustain the company.
Thomas Cook needed more than Government underwriting. Haemorrhaging billions in value over the last decade. Raising funds to prop itself up in that time. The only thing of value was its name and heritage, and that was spunked against the wall as it failed to adapt.
It couldnt be sustained as a going concern.
The UK government was right.
2019/09/26 06:19:15
Subject: British Travel Firm Collapses leaving hundreds of thousands stranded
Yeah 200m now, more past winter, then more...The company has been barely escaping this fate for a while and debts just kept piling. Where's the magical money button for them? Future didn't look brighter to begin with. Now if there was believable case for them becoming profitable in future fine. But situation, in large due to that which shall be named, makes that very, very, very unlikely. So basically 200m would be more money for banks to pad their own pocketlines.
Of course if UK wants to do couple hundred million donation every few months that's one thing. But what about all the other companies going bust? There was already that steel company that wasn't supported. What makes Cook more worth for constant cash flow from goverment?
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2019/09/26 09:06:21
Subject: British Travel Firm Collapses leaving hundreds of thousands stranded
I’m not against Government bail-outs when it’s a temporary cash flow issue, and the company is otherwise solvent.
Consider the German side, listed above. There, there’s evidence it is solvent and profitable in the grand scheme of things. But with Thomas Cook going, it’s left with a temporary hole in its books.
Bit of government cash patches said whole, preserving jobs for the longer term.
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Agreed, if it couldn't sustain itself or turn itself around then all it would do is keep hunting for money wherever it could whilst bleeding out money.
Big names can sometimes have a lot of clout, but at the same time they can also get locked into a system of working that is very hard to change when the world around them makes big shifts. Kodak nearly bust themselves when film died and digital took over in the camera world. That they survived is quite amazing considering that they've basically had to go from a world wide supplier of a mainstream product to a smaller world wide supplier to a niche market.
It's a bit like an oiltanker at sea. Lots of power, lots of wealth and potential to bash through some big waves that would sink smaller firms; but at the same time very slow to make massive changes in their course. They can turn, but it takes a lot to move them and sometimes they need outside influence (tugboats/money/investment) to make huge swings in very small distances.
The point of a bailout in this case wouldn't be to "save" the company, it would be to allow it to wind up in an orderly fashion over a period of a few months rather than going bust overnight.
You can't just compare cost of bailout/underwriting vs cost of flights for all the people stranded abroad, there are secondary costs in terms of economic activity and dealing with thousands of redundancies.
But the current government are big fans of disaster capitalism and their pals make tasty cash off of market wobbles, so of course they wouldn't do anything to make things more orderly.
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2019/09/29 14:48:47
Subject: British Travel Firm Collapses leaving hundreds of thousands stranded
Yodhrin wrote: The point of a bailout in this case wouldn't be to "save" the company, it would be to allow it to wind up in an orderly fashion over a period of a few months rather than going bust overnight.
You can't just compare cost of bailout/underwriting vs cost of flights for all the people stranded abroad, there are secondary costs in terms of economic activity and dealing with thousands of redundancies.
But the current government are big fans of disaster capitalism and their pals make tasty cash off of market wobbles, so of course they wouldn't do anything to make things more orderly.
An orderly wind up? 1000s of staff would be let go as as soon as the order was put into place. Ditto aircraft grounded within the UK so as to prevent them being seized.
Funding still needed to repatriate customers stuck abroad.
1000's more suppliers left with bills unpaid.
And the tax payer on the hook for cash because a government was foolish enough to underwrite a name 'too big to fail'.
No. This time the UK government was right not to help. Delaying the inevitable just makes things worse. A week? month? a year?
Focus should now be on how and why the collapse took place. I'm guessing that executives have been paid huge salaries to slow and possibly hide a death spiral for at least 10 years. The recent crop hoping that takeover would see them washing their hands of failure.
2019/09/29 15:01:19
Subject: British Travel Firm Collapses leaving hundreds of thousands stranded
I got the impression that the company intended to keep going. A shutdown in slow motion, ergo not sending out any more flights and only returning those already on trips etc... might have been possible, but I didn't get the impression that that approach was on the cards.
Plus if that were the case chances are the banks would have backed out instantly. There's no real return on investment if the company is shutting down so no reason for them to hold onto any investment interests. From their point of view simply shutting it down in one go is more profitable. It also reduces the head time on which people, knowing a company is down the drain, siphon off whatever they can get away with before they are let go.
