Thomas Cook Files For Bankruptcy Protection In The US

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Thomas Cook, UK based tour operator, that operates flights under its name sake and Condor brands has filed for bankruptcy protection in the US.

Thomas Cook

Thomas Cook is in the process of trying to get bonds of more than $1.1B restructured (inability to pay per original terms). If the process fails and the company is unable to secure more funds, the group is likely facing a bankruptcy and liquidation.

Per Wikipedia (access here) the group currently operates more than 100 aircraft:

Here’s an excerpt from the Financial Times (access their piece here):

However sources close to the business said that it was almost inevitable that shareholders would lose their money — which is likely to include the stakes held by management and staff.

The company previously said that it expected shareholders to be “significantly diluted” and that Thomas Cook could be taken off the stock market.

Harry Martin, an analyst at Bernstein, said that if the company did survive its efforts to pivot towards being more of a hotel and resort business would be essential. “If they can get through this period it will make them less cyclical and will be a more financially sound model,” he said.

Here’s en excerpt from the Guardian (access their piece here):

Fears for the future of the the 178-year-old tour operator have been mounting, as it threatens to buckle under the weight of high debt, intense competition and one-off factors including last summer’s heatwave and Brexit uncertainty.

The company, which employs 20,000 staff, including 9,000 in the UK, succeeded on Monday with a courtroom application to put off a creditors’ vote over the terms of a £900m rescue funding injection – which could yet rise to £1.1bn – until next week.

Shares in the company slumped 10%, taking the decline in the last 12 months to 94% and leaving the entire business valued at just £69m. But they recovered slightly on news of the delay.

Conclusion

Thomas Cook is one of the few integrated travel companies left that own an airline or two, resorts and also the distribution channel. You can also purchase standalone tickets for these Thomas Cook and Condor flights that are used for shuttle leisure travelers on packages.

The company is basically trying to swap at least part of the outstanding debt to equity (current equity holders would lose most if not all of their investment).

Passengers who are scheduled to fly on Thomas Cook and Condor operated flights or have purchased a package from the company should pay attention whether the company collapses or is able to secure more funds and the deb-to-equity swap goes through.

It would sad to see a company with such a long history to disappear.

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