[Travel] Thomas Cook

[Rugrat]

Very, very unlikely. They went into compulsory liquidation, not an administration. This means that they’ve ceased trading entirely. It’s just possible that small parts of the business may be bought, but even that’s unlikely - a purchaser would have to move very swiftly (within about 24-48 hours); any UK employees of those parts of the business would be TUPEd over.

Any hedge fund who had a credit default swap position (I don’t know if there are any) will now do very nicely out of the liquidation. So that’s alright then.

Yes, I recognised the need to move at lightning speed but I'm not familiar with compulsory liquidation and administration (the former locks doors and the latter stumbles along until a buyer found?)

It's a pity though ... the creditors will now get the forced sale market value of assets which I'm confident is a number lower than what it would be attractive to a potential buyer of the going concern.

All supposition obviously but without the burden of massive debt and interest payments, the opportunity to switch in/out management, streamline and dispose then I'm sure this is a business which has great potential. The fact that they were still paying themselves tidy bonuses and even paying Divi's up until 7 or 8 months ago is a sure sign of much that was wrong

 

[LlcoolJ]

Quite, I mentioned earlier about the woman saying how unfair it was she would have to get a coach from Scotland to Birmingham. I also saw somewhere about these two women (ultra fat) who only had enough tablets for their "life threatening" condition to last until the day they were due to fly home. Well if you are so stupid not to take extra tablets with you which would save your life should their be any issues you probably need to succumb to natural selection.

Did they really mean "pies"?

 

[Balders]

Not what my TUI pal has said in the past - he's regularly spoken about trips he's made after which they have pre-bought an entire hotel's availability 18/24 months ahead........

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This only applies to Hotels where the Tour Op negotiates the Hotel to be exclusive to them (or UK exclusive for some) Cooks primarily had exclusivity on their Sentido Hotels, although they are continuing to trade as not technically owned by Cooks. Tui have "Sensatori" hotels, they also own part of Riu and sourcing those hotels is difficult outside of Tui, as are the Royalton chain to name a few. All other rooms are booked on an individual basis and will be paid for as defined by the Contract Terms between the Tour Op/Bedbank and the Hotel.

 

[WATFORD zero]

Here’s the full article, anyone with a modicum of business savvy will tell you their model was flawed and their customers have suffered, although the ones who have already had their holidays no doubt payed next to nothing for their holidays to Orlando and Cuba so they were alright.

Shares in other travel companies like TUI and On The Beach, have risen since the collapse of Thomas Cook.

Sarah Coles, personal finance analyst, told Sky News that Thomas Cook's business model had a "fundamental flaw" by borrowing money at this time of year to bulk buy hotel rooms and lease claims, and then making it back throughout the year.

Ms Coles said that in contrast, TUI doesn't book anything until it's received money from the customer, by buying things like hotel rooms further downstream.

She said they have broken into cruises too, which has helped. Thomas Cook was not able to invest because it was running with debts.

She said that On The Beach is benefiting because it has more customers available since Thomas Cook has collapsed. However, she warned they will have problems going ahead because packages aren't too hard to put together.

I would have thought anyone with a modicum of business savvy may be able to see the potential flaw with selling items that you haven't actually secured. Particularly if the suppliers of the items were aware of this practice

 

[RandyWanger]

Not what my TUI pal has said in the past - he's regularly spoken about trips he's made after which they have pre-bought an entire hotel's availability 18/24 months ahead........

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When I worked for TUI we'd get great deals on empty rooms last minute that they'd booked ahead of time and not filled. May have changed in the past 5 years but they used to bulk book.

 

[Goldstone1976]

Yes, I recognised the need to move at lightning speed but I'm not familiar with compulsory liquidation and administration (the former locks doors and the latter stumbles along until a buyer found?)

It's a pity though ... the creditors will now get the forced sale market value of assets which I'm confident is a number lower than what it would be attractive to a potential buyer of the going concern.

All supposition obviously but without the burden of massive debt and interest payments, the opportunity to switch in/out management, streamline and dispose then I'm sure this is a business which has great potential. The fact that they were still paying themselves tidy bonuses and even paying Divi's up until 7 or 8 months ago is a sure sign of much that was wrong

Yep, you’ve caught the essence of the difference. And yep, I agree - without the debt, and without the current mgt, there’s a kernel of a decent business in there somewhere.

 

[Balders]

Compare the Thomas Cook model to the Jet2 Holidays model. I appreciate that Jet2 haven't got as far south as Gatwick (that may change now!) but Cooks had a lot of bricks and mortar, acquisitions which haven't worked out and legacy systems (you try dealing with their Trade systems!!) Jet2 Holidays were already ATOL licenced to carry more passengers than Cooks and are the clear 2nd biggest Tour Op in the market to Tui. They have no shops and really good systems........

 

[Kinky Gerbil]

Not what my TUI pal has said in the past - he's regularly spoken about trips he's made after which they have pre-bought an entire hotel's availability 18/24 months ahead........

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Common practice to have a few exclusive hotels on the book.

 

[Weststander]

Here’s the full article, anyone with a modicum of business savvy will tell you their model was flawed and their customers have suffered, although the ones who have already had their holidays no doubt payed next to nothing for their holidays to Orlando and Cuba so they were alright.

Shares in other travel companies like TUI and On The Beach, have risen since the collapse of Thomas Cook.

Sarah Coles, personal finance analyst, told Sky News that Thomas Cook's business model had a "fundamental flaw" by borrowing money at this time of year to bulk buy hotel rooms and lease claims, and then making it back throughout the year.

Ms Coles said that in contrast, TUI doesn't book anything until it's received money from the customer, by buying things like hotel rooms further downstream.

She said they have broken into cruises too, which has helped. Thomas Cook was not able to invest because it was running with debts.

She said that On The Beach is benefiting because it has more customers available since Thomas Cook has collapsed. However, she warned they will have problems going ahead because packages aren't too hard to put together.

"Sarah Coles, personal finance analyst, told Sky News that Thomas Cook's business model had a "fundamental flaw" by borrowing money at this time of year to bulk buy hotel rooms and lease claims ...."

That doesn't tally with the widespread and matter of fact news that hoteliers have not been paid by TC. The system is that they're paid when holiday makers arrive. TC's hoteliers across the world are demanding payment from the unlucky, stranded TC guests.

 

[Invicta]

Will be interesting to see if someone (Branson, TUI, ANO) make an offer to the administrators for the entire business. No idea what the numbers would be but it would be considerably below the 1.7BN debt and they get a going concern with ready made assets (aircraft, people, property) and travel partners. Put a decent management team in there that know how to run a travel business properly and I can't see it not being 'successful' I assume a price could be offered that honoured all forward bookings.

Unlikely I know but not beyond the realms

Surprised Mike Ashley hasn't tried to buy it !

 

[Springal]

"Sarah Coles, personal finance analyst, told Sky News that Thomas Cook's business model had a "fundamental flaw" by borrowing money at this time of year to bulk buy hotel rooms and lease claims ...."

That doesn't tally with the widespread and matter of fact news that hoteliers have not been paid by TC. The system is that they're paid when holiday makers arrive. TC's hoteliers across the world are demanding payment from the unlucky, stranded TC guests.

They pay 90-120 days after guests leave I believe. And yes outrageous that hotels are trying to make guests pay, especially as ATOL covers the suppliers too I thought.

 

[Beach Hut]

We were caught up in the Monarch collapse not knowing they owned the company that did the hotel bit, suffice to say we were offered an alternative option at no extra cost and were advised the original hotel would not have been paid, good service from Travel Republic

 

[Boys 9d]

Who's been privatised then?

Nationalised in 1948, privatised in 1976.

https://en.wikipedia.org/wiki/Thomas_Cook_&_Son

 

[Weststander]

They pay 90-120 days after guests leave I believe. And yes outrageous that hotels are trying to make guests pay, especially as ATOL covers the suppliers too I thought.

The hoteliers are naturally concerned that they’re funding the stay of guests, with the possibility of receiving no consideration.

5live covered this really well in the last hour, the head of Resolver stating that within 24 hours the CAA or UK Government officials (I think it was them), would’ve liaised with all hotels globally, in effect to fund the continued stay of TC guests with UK public funds picking up the tab.

 

[drew]

Nationalised in 1948, privatised in 1976.

https://en.wikipedia.org/wiki/Thomas_Cook_&_Son

Fair enough. Strange though that a travel agent was nationalised!

 

[Nigella's Cream Pie]

Today I tried and failed to cash, at Barclays, TC travellers cheques which I've been taking on holidays abroad for donkeys years and not used at all.
They were confident it would be OK, lots of phone calls, I showed my passport, I signed all 6 of them and they wrote on back of them, they checked my Barclays debit card (although they said they'd semd me a cheque), then it fell through after half an hour and they put white stickers over the back of each cheque.
They suggested go to TC branch but I found that was closed of course, so looks like I'm stuffed particularly as I've now signed all the cheques.

 

[Wardy's twin]

Banks going under would be catastrophic. Where do you draw the line on bailing out businesses - who would and wouldn't be eligible? And TC business model wasn't working. They could be bailed out for £200M to keep the lights on but they'd be in trouble again within 12 months.

losing your job might also be pretty catastrophic to your finances.....

Where to draw the line? Some would need to have a look at how viable the business was , how much it will cost to repatriate, how much it will cost in benefits for those who have lost jobs and then make an educated decision rather than hide behind a snide - the EU won't let us. I would not be surprised if teh business is not bought for a song and sold on for a big profit.

 

[Weststander]

losing your job might also be pretty catastrophic to your finances.....

Where to draw the line? Some would need to have a look at how viable the business was , how much it will cost to repatriate, how much it will cost in benefits for those who have lost jobs and then make an educated decision rather than hide behind a snide - the EU won't let us. I would not be surprised if teh business is not bought for a song and sold on for a big profit.

Mike Ashley Travel?

 

[Pavilionaire]

Banks going under would be catastrophic. Where do you draw the line on bailing out businesses - who would and wouldn't be eligible? And TC business model wasn't working. They could be bailed out for £200M to keep the lights on but they'd be in trouble again within 12 months.

That's not the point. He was telling the interviewer the government wouldn't interfere in a private sector business yet the government HAVE bailed out much larger businesses already, banks with directors with duties of care to their stakeholders that flouted the rules systemically for years and got away with it.

There is a real disconnect between politics, government and the real world of business, and what is worrying is the extent to which so many of our big UK businesses and employers are so exposed right now. Grant Shapps may say that Thomas Cook haven't kept up with change and paint them as some kind of dinosaur like the directors haven't even heard of the internet but the fact remains the business has been going for 178 years, until recent weeks there were millions of customers booking holidays and the brand was still popular.

 

[Juan Albion]

Got to love the system that rewards vultures better than ordinary hardworking people. Grrrr.

The Guardian:

"City speculators found two ways to profit from Thomas Cook’s downfall.

One group shorted its shares in recent months - banking profits as the value of the equity shrank to nothing.

The second (as flagged earlier) took out insurance on its bonds. Those credit-default swaps (CDS) are expected to pay out some $250m, or £200m - or roughly the funding shortfall that brought Thomas Cook down.

On the other hand, people who bought Thomas Cook’s shares and bonds have lost out (as have whichever banks or insurers took the other side of the CDS contracts)."