Why did the holiday giant Thomas Cook collapse?
THE world's oldest travel firm Thomas Cook is now defunct, after failing to obtain millions of pounds of extra funding in September 2019.
Here we look at why the operator failed.
Why has Thomas Cook collapsed?
Thomas Cook confirmed that all the UK companies in its group have ceased trading, including Thomas Cook Airlines.
All holidays and flights provided by these companies have been cancelled and are no longer operating. Every Thomas Cook retail shop has also closed.
Cabinetmaker and former Baptist preacher Thomas Cook founded the business in 1841 in Leicestershire, for local excursions.
He was hoping to offer an alternative source of entertainment to drinking, and initially offered a 12-mile trip from Leicester to Loughborough.
But, 178 years later, the British tour operator has fallen victim to multiple setbacks including changing travel habits and the rise of online booking sites.
It was also hit by the sinking pound and unusually hot weather which encouraged fewer Northern Europeans to travel, it adds.
Court documents have also shown a balance sheet deficit of over £3billion.
In a High Court witness statement, Peter Fankhauser, its now former chief executive, lists liabilities including £1.9billion of debt and guarantees to organisations such as the Civil Aviation Authority, bonding providers and payment service providers, .
Analysts said Thomas Cook has been overtaken by online services like Airbnb and internet travel companies.
"The environment in which Thomas Cook operated radically changed with the advent of budget air travel, online travel services and easy access to private accommodation through online platforms like Airbnb," says Professor John Lennon, director of the Moffat Centre for Travel and Tourism at Glasgow Caledonian University.
"The merger with Airtours and MyTravel Group left Thomas Cook with a major debt burden that became harder and harder to service.
"Combined with increased competition and consumer uncertainty, weaker sterling as a result of Brexit and increasingly nervous lending organisations, it left limited possibilities for an alternative outcome."
The Financial Reporting Council said that it was considering “whether there is any case” for an investigation and enforcement action “as a matter of urgency”.
MORE ON THOMAS COOK
When did Thomas Cook collapse?
The travel company went into administration on September 23 triggering the largest peacetime repatriation effort in British history.
The operator was unable to meet its 11.50pm deadline to pay its creditors.
Final repatriation flights touched down on Monday, Ocotber 7.
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