Collecting money from customers when you know, or should have known, that you cannot deliver the product. Is that not fraud? Should there not be jail for some person or persons?
The British government is now to spend millions of tax monies repatriating Cook's customers. Apparently this happens after Cook executives took major bonuses out of the company. Fraudulent conveyances? Can the UK government recover anything?
So far this amounts to a government bailout. Heads should roll!
5
I wonder when Thomas Cook knew they were going to go under and whether they knowingly continued to accept new business after that.
7
Airlines cost cutting is reducing safety in the Air Transport industry. This danger is present now from terrorists working for carriers to manufacturers excreting approvals vetted by accountants. The airlines operate on thin margins. The trend to satisfy the online “cheap air” companies is costing passengers lives.
The question should actually be "How can a company accumulate 1.7 billion pounds of debt?" No one started to get worried after 100 million, or 500 million?
5
Saddened to know that Thomas Cook has collapsed. I have had two wonderful memories with Thomas Cook - Group tour to Europe and another customised tour to Thailand. I was planning to take on two more tours - on Jalesh Cruize during December this year and another to Bali next year. I will be missing Thomas Cook services.
1
A solid, if incomplete analysis. The company made a series of catastrophically bad decisions in 2007 (taking over even more physical stores for example) and accumulating massive amounts of debt. It is this debt that has killed them as they ended up paying hundreds of millions of dollars in interest just to stand still and the banks said 'no more'.
2
Truly amazing that the company did not see the change that was happening, that was coming in the last twenty years. Says something about the top management and their lack of vision and imagination.
1
This model is used pretty extensively in Canada. Sunwing, Air Transat and the other package airlines have pretty strong year-round business flying down south in the winter and to Europe in the summer. It seems they’ve been adding more routes and more options every year.
Problem #6. Travelers Cheques. Thomas Cook was a world leader in the enormously profitable travelers checks business. People paid a fee for the checks and as long as redemptions were balanced out by new sales, Thomas Cook had free use of a multi billion dollar float for decades. Unfortunately, credit and debit cards have mostly replaced travelers checks over the last 25 years and now the fees and float are gone.
5
It is not surprising at all that they had debts beyond their income capabilities. It's all about valuation these days and less about being able to meet expenses. The higher the turnover, the higher the valuation.
However, for T. Cook to not realize how travel booking has changed over the past decade or so, is unfathomable. The Internet has completely changed the travel booking process. The savvy travellers pick up components one by one leisurely, before they go on a holiday.
This is a lesson for all of us in the industry. Even the biggest can fail. And the bigger they are, the harder they fall!
2
They also ignored package travel regulations, while a great safety net for consumers it adds costs and liabilities than online companies were less likely to face, especially those based outside the UK. UK business rates also make any high street business difficult to compete with its online counterparts.
1