LONDON – Debts, competition from online rivals and geopolitical factors such as Brexit pushed Thomas Cook to its collapse on Monday, according to analysts.
The British tour operator ended 178 years of history in the travel sector by declaring a suspension of payments, a measure affecting its 22,000 employees, of which 9,000 are British, and has left approximately 600,000 tourists stranded worldwide, according to the BBC.
The firm, which had agreed to a rescue package with the Chinese group Fosun, failed to raise $274 million in additional funds demanded by the banks, such as the partially nationalised RBS and Lloyds, to guarantee its survival.
Thomas Cook went through financially complicated moments during the last decade and the delicate situation had worsened significantly during the last year.
Among the elements that contributed to its fall, experts point to a large debt of $2.1 billion that made it impossible to cope competitively with its online rivals.
This forced Thomas Cook to have to sell three million vacation packages annually simply to cover interest payments.
Analysts also point to other geopolitical factors that have been making a dent in the account balance.
In 2016, a coup attempt in Turkey – the most popular destination for package holidays offered by the company – had a strong impact, as well as the heatwave that affected Europe in 2018, which discouraged many tourists from going abroad.
The tour operator recorded losses valued at nearly $1.9 billion last May, corresponding to the first half of the first fiscal year, merged in 2007 with the company MyTravel.
This agreement was intended to create a European giant in the travel business, but it turned out to be a financial fiasco for Thomas Cook, since it was mired in millions in debts, from which it never recovered.
The departure of the United Kingdom from the European Union, planned in principle for 31 October, has generated great uncertainty and discouraged many potential clients to manage holiday reservations with an operator that will be outside the EU.
The cost of fuel and an increase in the price of hotels have also contributed to the decline of the company.
Thomas Cook has tried to keep going until the last moment.
Its managers held emergency meetings with different shareholders and creditors on Monday morning in a last-ditch attempt to stay afloat.
The firm had planned to sign a rescue package with the Chinese conglomerate Fosun last week, estimated at $1.1 billion, but was delayed by a requirement from banks to have new reserves for the winter.