Thomas Cook collapse: Industry specialists have their say

Package holiday operator Thomas Cook has ceased trading with immediate effect, leaving around 150,000 holidaymakers stranded and 21,000 job losses worldwide.

Businesses, leaders and specialists across a range of sectors have reacted to the collapse of the 178-year old travel firm.

Rebecca Thornley-Gibson, partner at city law firm DMH Stallard

“Most of the travel industry were on a constant refresh on their phones in the early hours of this morning anxiously waiting to see if their worst fears would be allayed.

“Devastatingly for the industry they were not and the Thomas Cook Group disappeared from the travel landscape at 2am this morning.

“There are, and will continue to be, multiple impacts from the loss of 9000 jobs in the UK in Thomas Cook. The impact on a short term basis will be mitigated by the rights of employees to claim payments including arrears of pay, statutory redundancy, holiday and notice payments from the Insolvency Service.

“If these are paid promptly employees will at least have some time to catch their financial breath as they seek alternative roles elsewhere.

“A very sad day for Thomas Cook,the travel industry and all those ancillary supply services that will now face uncertainty due to their future loss of revenue.”

Online investment platform AJ Bell

“The demise of Thomas Cook is a sad day on many accounts.

“Lots of people who have booked months in advance will have found their holidays are now cancelled. Thousands of people who work for Thomas Cook will have unfortunately lost their jobs.

“Hundreds of Thomas Cook stores will now be shut, adding to the woes depressing the high street; and investors owning Thomas Cook shares will have lost everything.

“Ultimately Thomas Cook failed because it didn’t have the cash flow to reinvent itself to fight off growing competition as so much money was going on debt repayments.

“It struggled with very thin profit margins, high levels of competition, rising fuel prices and large borrowings. It also had expensive stores on the high street to maintain and leasing fees on aircraft to keep paying.

“Despite having 22 million customers, the business only made £250 million underlying earnings before interest and tax which equates to about £11 a customer. That’s barely anything given the amount of effort involved to run its business and market its holidays.

“A weak pound and concerns about the impact of Brexit on consumer finances and the economy have resulted in many consumers holding off from booking holidays, plus there has been a growing trend for staycations where people holiday in the UK.”

Travel and tourism specialist Dr Neil Robinson, University of Salford Business School

“The events of the last 24 hours shows us the vulnerability of the aviation/travel sectors.

“Mr Cook would be turning in his grave. A lad from Derbyshire who went on to create one of the world’s most recognisable travel brands, which now lies in financial ruin.

“These are very sad times and my heart goes out to employees and customers alike.

“So where did it all go wrong? The downturn in bookings post the Arab spring back in 2010, saw profits drop as people were reluctant to buy travel product associated with this region and the seeds of change for Thomas Cook and the wider travel sector were already being sown.

“Fast forward a few years and the sector has come under many pressures associated with very slim profit margins for each travel product sold, a possibility of too many players in an already saturated market and one might argue that the product mix on offer at Thomas Cook did not align with what its customers really wanted.

“Thomas Cook’s financial strength has not looked good over recent months, with share prices falling, senior managers leaving and would-be bail out loans not materialising, all adding to the creation of a perfect storm.

“Are other companies set to follow? One hopes not, if in doubt make sure your travel provider has ABTA/ATOL protection, pay with a credit card and keep your fingers crossed, this sorry saga is not over yet. In the meantime let us pay homage to the once great travel provider that provided many of us with our first taste of the jet set & holidays overseas.”

Kirsten Hughes, UK managing director and CCO of Manchester-based firm Travel Counsellors

“Following the unfortunate collapse of the Thomas Cook Group our priority is to ensure our customers, both in resort and due to travel, are looked after. We became concerned of a potential failure last week and a crisis team at head office guaranteed we were prepared to support our Travel Counsellors and customers if and when the news hit.

“Our 24/7 duty office had already run reports to identify affected bookings and we have been in constant contact with our Travel Counsellors to support them.

“We have also set up a dedicated freephone number and e-mail address for any travellers affected by the Thomas Cook collapse, offering advice and clarity to people confused about what to do and how their holiday is protected, regardless of whether they booked through Travel Counsellors.

“The flexibility of our business model, with travel advisors proactively working from home, also means we can ensure all customers are looked after around the clock, putting our care for the customer and our people at the heart of everything we do.

“Whilst the subject of how a customer is financially protected can be complex, we are keen to reassure our customers that their bookings are protected.

“It is extremely sad news for many thousands of Thomas Cook customers and of course the staff that have been made redundant, and as an industry we must come together to offer support to these people and focus on helping those affected.”

Professor Lawrence Bellamy, academic dean of the Faculty of Business, Law and Tourism, at the University of Sunderland

“After raising revenue levels from 2016 to 2017 - but realising marginal profits - Thomas Cook cited the exceptional summer as a reason for their poorer sales and resulting losses in their 2018 annual company report.

“The company had falling margins from 2015 and had increased its debt position greatly in 2018 after reducing in previous years.

“For such a longstanding giant of the industry then the capability to absorb the issue, restructure to take out cost and ensure that the company was more robust going forward, should have been given.

“However, further issues arose including the weaker pound hitting procurement, consumer confidence, a flat package holiday market, increasing aircraft operating costs and different business competition models.

“These all tested the resilience of an organisation which, due to timings of payment and scale of operations had a built in cash-flow advantage and procurement power.

“When times become challenging the ability to change greatly increases the chances of survival and dealing with the overhead of aircraft fleet, sales outlets and hotels, saw the company with a large asset base and all the costs which come with that.

“Given the high revenue and operations of the group then it is likely that elements of the company will be acquired and operated by others in the future, for a reduced cost.

“In the meantime the workforce stretching over more the 20 countries and totalling over 20,000 employees is left without income and thousands of holiday makers with Atol, their insurance or credit card company to get them home and recoup their losses. This is far more substantial than just the loss of a trusted brand.”

More to follow.

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