The slow-motion demise of the world’s most iconic travel brand has been set out in chilling detail in a newly published timeline.
The document reveals how leaks to the media were blamed for pushing the heavily indebted firm over the edge, when prospective backers were alarmed by the adverse publicity.
The timeline says that the summer of 2018 was extremely difficult for Thomas Cook.
“The business and the industry had to deal with one of the hottest and longest lasting summer heatwaves in history, across all of the company’s key European markets.
“Customers either put off their overseas holidays or stayed in their home countries.
“This led to a sudden oversupply in the market and significantly impacted margins for the group and all its competitors.
“At the same time, the group airline experienced an unprecedented level of operational disruption due to a lack of sufficient aircraft capacity in the market as well as widespread air traffic control issues.”
On 24 September 2018, the firm issued a profits warning. Shortly afterwards the Civil Aviation Authority (CAA) renewed Thomas Cook’s Air Travel Organiser’s Licence (Atol) but insisted on special measures – including regular scrutiny of booking trends.
In late November, the board discussed the possibility of selling the airline business or the tour operator business, and suspended dividends to shareholders. Shortly after, Thomas Cook began an “investor roadshow” with analysts and investors.
“Feedback from investors was that the company had the right strategy in place,” the timeline says.
Uncertainty over Brexit is blamed for a slow start to the normal peak booking season early in 2019.
By February the airline was put up for sale, and on 1 March 2019 Thomas Cook started talks with the Chinese conglomerate Fosun about buying the tour operator business that provided package holidays – the main business of the travel firm.
On 15 May 2019, the audit committee agreed to write down the goodwill that had been retained on the balance sheet since the merger with MyTravel in 2007 by £1.1bn.
“Even though the goodwill impairment had no impact on the cash position of the business,” the timeline notes, “it had an impact on the confidence in the business of consumers, suppliers and bidders for the airline business.”
On 17 May 2019, Citibank published a report on Thomas Cook with a “sell” recommendation and a price target of zero – rating the firm as worthless.
The following day the Financial Times published a front-page article under the headline “Thomas Cook is on the brink of collapse”.
By June 2019, the CAA was insisting on weekly calls with Thomas Cook. On 10 July, Thomas Cook concluded that none of the bids received for the various parts of the group was likely “to generate sufficient value to address debt and liquidity issues and … result in a sustainable residual business”.
Work began on a complex financial rescue plan involving Fosun, its leading shareholder, and lenders. But ominously, Thomas Cook also started talking to the CAA about “contingency planning in case a repatriation exercise became necessary”.
On 12 August 2019 the firm said that its long-term future was assured. The rescue plan included £750m in fresh funding designed to see the travel firm through what is expected to be a tough winter, and to “provide the financial flexibility to invest in the business for the future”.
The chief executive, Peter Fankhauser, told The Independent: “For our customers, for our employees, for our suppliers, this is really good news, because it’s a plan which is securing, going forward, the future of the business.”
But four weeks later, three of the core lending banks said they believed that an additional £200m of funding would be needed.
On 15 September 2019, a newspaper article said that the CAA’s contingency planning had begun. A day later, a routine submission under the US Bankruptcy Code was misinterpreted as a filing for bankruptcy protection.
Thomas Cook started talks with the UK government about the possibility of “funding support on commercial terms”.
Sky News said on 19 September that Thomas Cook was “scrambling to stitch together a last-ditch fire-sale in a bid to avert collapse” and had “a £200m black hole in its finances”.
On hearing this report, crucial suppliers began to demand prepayment from Thomas Cook, including for aircraft fuel.
Over what turned out to be the last weekend in the company’s history, the adverse publicity “resulted in an overwhelming number of calls to the group’s call centres, which included requests to cancel holidays”.
By 5pm on Sunday 22 September, “the company was informed that Fosun and the banks had expressed concerns about the impact of recent media coverage on the company’s business and that they had therefore imposed new requirements as conditions to their support”.
The key condition was that Thomas Cook gained the support of the government. A few minutes later, Peter Fankhauser was told that the government would not provide support.
The company continued to sell holidays up to midnight.
At 1.47am on Monday 23 September, winding-up petitions for Thomas Cook and 25 subsidiaries were granted.
The judge noted that “the directors of the companies have done their very best to see if some form of arrangement other than liquidation can be pursued”.
The media were informed at 2am, just before the first Thomas Cook passengers were due to start checking in at Manchester airport for their flights to the sun.
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