Thomas Cook Travel Company Goes Bankrupt; Stranded tourists: NPR

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British travel company Thomas Cook collapsed, leaving 150,000 British holidaymakers stranded abroad. Steve Inskeep from NPR speaks with Financial Time journalist Daniel Thomas.



STEVE INSKEEP, HTE:

British travel company Thomas Cook has collapsed. The company coordinates organized trips, or rather it has coordinated organized trips. They immediately go bankrupt, leaving hundreds of thousands of travelers stranded abroad. The British government says the repatriation of a total of 150,000 British nationals will require the largest peacetime repatriation operation Britain has ever conducted.

Daniel Thomas is the executive editor of the Financial Times. He’s covering this story from London. Welcome to the program.

DANIEL THOMAS: Hello.

INSKEEP: How does a 178 year old business close overnight?

THOMAS: Well, Thomas Cook had two big problems, and you can break them down into financial and strategic. It’s a business that has been around, as you say, for almost 180 years, but the last 10 years have been pretty terrible. They’ve – you know, they’ve been faced with, you know, a really tough market where people stop – it’s a chain of stores in the UK. You want to have a picture of the scene here, you go to the local high school streets in towns and cities, and you will see a Thomas Cook.

And you go – and usually what you have is that you will go there, you will book your vacation, they will do everything for you, a package will be put together, you just arrived at the airport , you fly to your hotel, charge your food and drink, you know, under the original cost, and you fly back on the plane. So it’s, like, a whole – you know, like a 360 package that they offer.

So for the company, what they saw is that more and more people are not doing that. They want to go to Airbnb. They book flights through low cost airlines. They do their own thing. And there is also this shift from this somewhat old-fashioned and garish idea of ​​package holidays. You know, people want different experiences. They want to have adventures. They don’t know wanting to sit for two weeks on a beach in Spain and be fed, you know, average food and whatever you can eat and drink.

INSKEEP: Right. Therefore…

THOMAS: So that has changed. I mean, the market has changed …

INSKEEP: OK, so the market has changed over time, but I just think – so you said it happened over a decade. But then, suddenly, this abrupt end. I remember the saying from Ernest Hemingway, that the way you go bankrupt is gradually then suddenly. How did it happen so suddenly?

THOMAS: (Laughs) Well, he’s got a lot of debt. They have about $ 1.7 billion in debt, and it’s been weighing on its balance sheet for some time now. This is reaching its climax. Money – you know, it earns a lot of interest. Its cash flow is – you know, cyclical. It is the nature of the business.

The problem, though, is that the owners of the company, the shareholders – and especially one called Fosun, which is a Chinese travel group – they’ve, you know, been looking for a solution. And Fosun went to the debt holders and said, listen – let’s do debt restructuring equity. So they made an agreement that would have put, fundamentally, a little more equity in the structure. Some of the – like, a lot of bondholders would have converted their debt into stocks, and Fosun would have taken a stake as well. And that was on the table and had more or less been agreed upon.

Then at the eleventh hour, a group in the bank said, actually, we’re a little more worried than we started out with, and we want a little more progress – some margin, and we want a few hundred million pounds. more in the structure. And that was the problem – they couldn’t find the money.

INSKEEP: And bang – the business is bankrupt.

THOMAS: They’re – yeah. Law.

INSKEEP: In a few seconds are you okay – is the government going to have to help pay to get people home?

THOMAS: Well, yeah. As you said, there are 150,000 British travelers, 350,000 European and international travelers – all of them have to go home now. It is a huge job for the government. They charter planes. Right now there are planes landing that they had to charter. Big logistical nightmare, really expensive – cost the government £ 100million or more here.

INSKEEP: Wow.

THOMAS: So yeah, it’s gonna be one of those really interesting things (laughs) but really complicated to figure out.

INSKEEP: Daniel Thomas of the Financial Times. Thank you so much.

THOMAS: Thanks.

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