Thomas Cook shutters 600 stores as rescue bid fails

British tour operator Thomas Cook has ceased trading with immediate effect, shuttering some 600 high street stores across the UK in the process. 

The world's oldest travel operator failed to secure a £1 bn (€1.1 bn) rescue package from creditors, while the UK government rejected a request for some £150 mln of state intervention.

Thomas Cook's four airlines have been grounded, while 16,000 employees in 16 countries - including 9,000 in the UK - have lost their jobs.

In a statement, the UK's Department for Transport (DfT) said all customers currently abroad with Thomas Cook would be brought home as close as possible to their booked return date.

More than 150,000 holidaymakers are situated in 51 destinations across 17 countries, and will be repatriated by the Civil Aviation Authority (CAA) and the government, which have hired dozens of charter airlines for the operation.

Bail out
Thomas Cook, which launched in 1841 with a one-day train excursion in the UK, warned in May that Brexit uncertainty had taken its toll on bookings. It only recently raised £900 mln from its largest stakeholder, China's Fosun, to prop up the business.

Last month, the firm announced that 18.1%-shareholder Fosun would inject a further £450 mln into the business, with creditors and banks set to contribute a further £450 mln. However, talks stalled and the rescue effort fell through.

The syndicate of Thomas Cook lenders said in statement that 'the lenders are deeply disappointed that it has not proved possible to rescue Thomas Cook'.

'Unfortunately, and notwithstanding the efforts of all stakeholders, the £1.1 bn funding requirement to adequately recapitalise Thomas Cook has ultimately proved too significant,' the statement said.

Fosun also owns the Club Med resort chain and a joint venture travel agency in China.

Real estate closures
As the headquarters of Thomas Cook's airline and home to 19 high street stores, the city of Manchester is bracing for 3,000 job losses.

But as the liquidation only affects solely British legal entities, many of Thomas Cook's overseas subsidiaries are now exploring whether they can continue to trade.

Russian tour operator Intourist, in which Thomas Cook owns a 50.1% stake, said it would continue trading as planned. The firm carries out its own contracting of hotels and remains one of Russia's largest tour operators.

Thomas Cook has tens of hotels in Spain, mainly focused in the Balearic and Canary Islands, both owned and under management contracts. Many of the hotels are still accepting reservations, although the websites of some of its hotel chains have already gone dark.

Thomas Cook's hotel investment fund, TCHI, a joint-venture with Swiss property investor LMEY, was launched in March 2018 and currently holds nine properties worth more than £200 mln, located mostly in Spain and Greece.

The fund had opened its first new build, Casa Cook Ibiza, this summer, and secured some €91 mln of funding from banking partners Piraeus in Greece and CaixaBank in Spain, with further developments in the pipeline.

Thomas Cook had planned to expand the fund to 10-15 hotels by 2021.

LMEY's Hans Kortlevers told PropertyEU: 'One of the shareholders is insolvent, but this will not affect the fund. Most likely other shareholders will buy out the ex-Thomas Cook stake. The fund will continue as planned.' 

 

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