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China-owned travel giant Thomas Cook collapses; UK to rescue stranded holidaymakers

Thomas Cook collapses: The company said that its board has concluded that there's no other option but to proceed towards compulsory liquidation with immediate effect.

twitter-logo BusinessToday.In   New Delhi     Last Updated: September 23, 2019  | 22:25 IST
China-owned travel giant Thomas Cook collapses; UK to rescue stranded holidaymakers
Thomas Cook declared bankruptcy

UK travel giant Thomas Cook has declared for bankruptcy after its last attempt to resuscitate its business fell flat. The 178-year-old operator had been seeking $250million from private investors to save it from collapse. "Despite considerable efforts, those discussions have not resulted in agreement between the company's stakeholders and proposed new money providers," Thomas Cook said in a statement.

The company said that its board has concluded that there's no other option but to proceed towards compulsory liquidation with immediate effect. Following the collapse of the travel company, the UK government hired planes to fly an estimated 150,000 holidaymakers back home free of charge. "Following the collapse of Thomas Cook and the cancellation of all its flights, Transport Secretary Grant Shapps has announced that the government and UK Civil Aviation Authority has hired dozens of charter planes to fly customers home free of charge," a statement mentioned. The operation that started on Monday has been described as the largest repatriation in peacetime history.

Thomas Cook chief executive Peter Fankhauser called it a "deeply sad day". "It is a matter of profound regret to me and the rest of the board that we were not successful. This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world," he said.

Thomas Cook's creditors held a marathon meeting on Sunday in an attempt to work out a deal. The meeting was followed by a meeting of the board of directors.

Not only the grounding of planes, Thomas Cook has been forced to shut travel agencies. The shutting down of agencies has left 22,000 employees out of job globally.

Chinese peer Fosun, which was already the biggest shareholder in Thomas Cook, agreed last month to inject 450 million pounds into the business as part of an initial 900 million pounds rescue package. In return, the Hong Kong-listed conglomerate acquired a 75 per cent stake in Thomas Cook's tour operating division and 25 per cent of its airline unit.

Thomas Cook in May revealed that first-half losses widened on a major write-down, caused in part by Brexit uncertainty that delayed summer holiday bookings.

The firm was created in 1841 by cabinet maker Thomas Cook in order to carry temperance supporters by train between British cities. It soon began arranging foreign trips, being the first operator to take British travellers on escorted visits to Europe in 1855, to the United States in 1866 and on round-the-world trips in 1872.

(With agency inputs)

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