Tour company Thomas Cook collapses, stranding hundreds of thousands of travelers

Stranded Thomas Cook travelers
Travelers who had planned to fly with Thomas Cook line up Monday at Son Sant Joan airport in Palma de Mallorca, a Spanish island in the Mediterranean.
(Jaime Reina / AFP/Getty Images)

Families stranded, honeymoons and vacations canceled, thousands of workers laid off: The sudden collapse of British tour company Thomas Cook and its network of airlines and hotels sowed chaos for hundreds of thousands of travelers and businesses around the world Monday.

Brought down by a variety of factors, including crushing debts and online competition, the 178-year-old travel agency that helped pioneer the package tour ceased operating in the middle of the night. Its four airlines stopped carrying customers, and its 21,000 employees in 16 countries lost their jobs.

The company’s failure rippled across the tourism industry, particularly around the Mediterranean, with travelers unsure how they would get home, hotels worried they wouldn’t get paid, guests afraid they wouldn’t be allowed to check out without forking over more money, and resorts hit with cancellations.

At Los Angeles International Airport, Thomas Cook Airlines operated two seasonal flights a week between L.A. and Manchester, England. They have come to a halt because of the company’s collapse. British Airways and Virgin Atlantic plan to accommodate passengers, according to LAX.

Overall, about 600,000 people were traveling with Thomas Cook as of Sunday, though it was unclear how many would be stranded, as some of the company’s regional subsidiaries were negotiating with local authorities to continue operating.

Thomas Cook traveler
A traveler sits and covers his eyes after arriving at the closed Thomas Cook check-in desk at London’s Gatwick Airport.
(Tolga Akmen / AFP/Getty Images)

The British government swung into action, lining up flights to bring an estimated 150,000 Britain-based customers back home from vacation spots around the globe in what was called the biggest peacetime repatriation effort in the country’s history.

Some 50,000 Thomas Cook travelers were reported stranded in Greece; up to 30,000 in Spain’s Canary Islands; 21,000 in Turkey; and 15,000 in Cyprus. Travelers lined up at airports, looking for ways home.

James Egerton-Stanbridge and his wife, Kim, were set to fly from London’s Gatwick Airport to Egypt to celebrate her 60th birthday when flights were grounded.

“Kim was crying this morning. We’re devastated,” he said.

Others took the news in stride. Sweden’s Bengt Olsson, who was traveling in Cyprus, said there were worse places to be stranded: “It’s nice to stay here. It’s warm.”

The reality was far harsher for the Thomas Cook employees who lost their jobs overnight.

“The staff have been stabbed in the back without a second’s thought,” said Brian Strutton, head of the British Airline Pilots’ Assn.

An estimated 1 million customers found their bookings for upcoming trips canceled. Many are likely to receive refunds under travel insurance plans but had no idea when those refunds would arrive. Thomas Cook said it served 22 million customers a year.

Stranded Thomas Cook travelers in Turkey
British travelers with Thomas Cook wait in line at the airport in Antalya, Turkey.
(Associated Press)

The company began in 1841 with one-day train excursions in England and grew to have travel operations around the world. It has been struggling for years because of competition from budget airlines and low-cost online booking sites.

Unlike travel websites, Thomas Cook had high fixed costs: It operated a fleet of 105 jets and owned about 550 travel agencies on major streets across Britain as well as 200 hotels in sun-drenched countries.

“The growing popularity of the pick-and-mix type of travel that allows consumers to book their holiday packages separately, as well as new kids on the block like Airbnb, has seen the travel industry change beyond all recognition in the past decade as consumers book travel, accommodation and car [rental] independently,” said Michael Hewson, chief market analyst at CMC Markets.

Business was also hurt in recent years by terror attacks in the Middle East and heat waves in Northern Europe that led people to stay home.

Things got worse this year. The company blamed a slowdown in bookings on uncertainty over Britain’s impending departure from the European Union. A drop in the pound’s value also made it more expensive for Britons to travel abroad.

Thomas Cook was also burdened by $2 billion in debt. It was seeking about $250 million to avoid going bust and held talks over the weekend with shareholders and creditors.

Thomas Cook airplanes
The Thomas Cook logo decorates the tails of planes parked on the tarmac at Manchester Airport in Manchester, England.
(Oli Scarff / AFP/Getty Images)

On Monday before dawn, Chief Executive Peter Fankhauser stood outside the company’s offices and announced that the effort to stave off collapse had failed.

“I know that this outcome will be devastating to many people and will cause a lot of anxiety, stress and disruption,” he said.

British authorities chartered dozens of aircraft to fly people home free of charge over the next two weeks, but they warned of delays and urged patience.

British Prime Minister Boris Johnson, who was traveling to New York for a meeting at the United Nations, said the British government was right not to bail out the company. He said doing so could have led other businesses to expect the same treatment.

Most of Thomas Cook’s British customers are protected by the government-run travel insurance program, which makes sure vacationers can get home if a Britain-based tour operator fails while they are abroad.

Germany’s government was considering granting a bridge loan to Thomas Cook’s unit there, the airline Condor. The subsidiary was still flying but stopped carrying Thomas Cook customers.

Thomas Cook’s collapse is also a blow to the many companies in resort areas that have long relied on it for business, including some 3,150 hotels.

In Spain’s Canary Islands, a favored year-round destination for Europeans, the association of hotels said it feared an economic hit. The Spanish government held meetings with regional authorities to assess the damage.

In Tunisia, the TAP news agency said the tourism minister intervened after reports that some Thomas Cook tourists in Hammamet were locked inside a hotel and “being held hostage” as hotel staff demanded they pay extra. The government said that the situation had been resolved and that the guests would not be prevented from leaving the country.