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Thomas Cook

Brief Background and History

Global travel group – Thomas Cook Group plc was formed on 19 June 2007 after the  merger of MyTravel Group and Thomas Cook AG which is a company found in 1841. The business was operating as an airline and tour operator, with travel agencies located in Europe.

The merger between MyTravel and Thomas Cook AG was sought for the purpose of integration to become more cost effective with the expectation of saving more than £75 million a year. Ownership was retained by Thomas Cook AG with 52% shares in the merged company.

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A Decade of Progress and Growth

Within a year and a half after being merged, the Thomas Cook bought Hotels4U.com – a booking website, its licence to operate from Dubai Investment Group, and a luxury travel firm – Elegant Resorts.

By 2009, Thomas Cook was signing deals with media companies such as Octopus Media Technology to create Thomas Cook TV, and with International Entertainment Supplier The E3 Group as a supplier for exclusive entertainment.

Arcandor who had a significant stake to the 52% shares of the new group filed for bankruptcy that same year, but did not affect the company. The shares of Arcandor were eventually sold to its creditors bank in September 2009.

In Thomas Cook’s unprecedented expansion in Europe, it bought Oger Tours the German tourism company in July 2010. In the same year, Thomas Cook merged with the branch network of The Co-operative Group, creating UK’s largest retail travel network. The Going Places brand of Thomas Cook was rebranded under the Co-operative’s brand.

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In 2012, it ceased publication of its Thomas Cook European Timetable. This was later on resumed by a publishing company not affiliated with Thomas Cook.

It was in 2016 when the Co-operative group decided to quit the branch network joint venture. In response, Thomas Cook bought the shares of Co-operative group taking full control of the retail network of travel stores that operated under the joint venture.

Lack of Financial Viability

Signs of an ailing company started to show when its Belgian operations from its airline segment was sold to Lufthansa on March 2017. A year later, business analysts were suggesting that Thomas Cook should be split up for the sake of its financial viability. By 2019, it has been receiving several bids for the purchase of its airline business and the whole company.

Then on March of the same year, it closed down 21 travel offices affecting 300 of its staff.

In its attempt for financial viability, it sought the help of restructuring specialist Alix Partners on April 2019 to formulate a restructuring plan for the reduction of its £1.6 billion debt, majority of which is attributable to goodwill write-downs.

£300 million of emergency funding was secured from banks in May 2019.

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The company was in talks with Fosun International from China for a £450 million deal. To supplement more funding, it also secured a £900 million in funding as part of a debt-for-equity swap.

With £250 million more needed to keep the company operational for the succeeding year, the UK Government Secretary of State for Transport Grant Shapps rejected the bail out and discussion of a government intervention.

Compulsory Liquidation

Thomas Cook Group including all its UK entities went under compulsory liquidation on 23 September 2019 which affected 21,000 employees globally, 9,100 of them in the UK. This also left around 600,000 customers around the world left abroad, 150,000 of these customers were from the UK, which resulted to the UK’s largest peacetime repatriation.

Thomas Cook Scandinavia and Thomas Cook brand were purchased by the Chinese conglomerate Fosun for £11 million. The deal included Casa Cook and Cook’s Club, the company’s trademark websites, social media accounts, and software.

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What went wrong for Thomas Cook?

Thomas Cook is another case study on how large companies can be an easy target of disruptive innovation.

178 years after the brand was founded by Thomas Cook in 1841, the business monumentally grew with £9bn sales annually, 19 million customers a year, and 22,000 staff worldwide.

However, financial, social, and climate factors such as climate issues, and low-cost travel, political instability in countries and destination it is catering to, led to the struggle and subsequent fall of the centenarian business and travel giant.

It’s unsurmountable debts, aggressive expansion, and High Street operation made it difficult for the company to survive under the current economic conditions. Smaller online rivals such as Airbnb, which has democratised travel, has also been one of the major causes of losing a significant market share in holiday travel.

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