WASHINGTON – I’m running behind in posting financial columns this week. Like everyone else, I have all I can do to keep up with the political news / mythology / outright lies that continue to clog the internet and network and cable TV this week. Notably this week, the longtime UK-based Thomas Cook mega-travel agency collapsed almost without warning, leaving hundreds of thousands of travelers stranded. Dueling China trade stories also continue to hit the news.
More recently, yet another Deep State attempt to defenestrate President Trump is underway in the Swamp. This time it involves a fake, “impeachable” Ukrainian scandal. This ongoing nonsense about a normal presidential phone call is an insult to the American people. But with a dysfunctional Congress refusing to do its job, it looks like it’s up to our ironclad president to slap this latest coup back. It would be nice if he got some help from whatever portion of DOJ remains loyal to him. And soon. But we’ll post on these matters in a followup article we’ll post as soon as we get this one up on the site
So stay tuned for Part II.
Thomas Cook goes under
Shocking news earlier this week, at least for veteran US travelers. The Longtime UK travel giant, 178-year old Thomas Cook, suddenly folded this past weekend. This promptly stranded a massive number of paid up customers (~600,000 of them) still on tour around the world. Worse, unable to get home, they had little recourse. Hotels and airlines wanted their money all over again, since Thomas Cook would never deliver.
ZeroHedge weighed in below on this familiar international company’s sudden demise. And the Twin Tylers note: it’s not the first European travel-oriented company to go under in recent memory. (As usual, bold text via ZH.)
“Becoming the latest European travel company to fail and leave its customers stranded (who can forget about the collapse of Iceland’s Wow Air back in March?), 178-year-old Thomas Cook collapsed after failing to secure a deal with its creditors, leaving the British government to step in and rescue the as many as 600,000 customers who are reportedly now looking for a ride home.“
An apology won’t get you home
“Thomas Cook CEO Peter Fankhauser apologized to customers ‘following a decision of the board late last night, a British government receiver has been appointed early this morning…we have not been able to secure a deal to save our business...I know that this outcome will cause a lot of anxiety, stress and disruption.’
“Fankhauser explained that while a ‘deal had been largely agreed, an additional facility requested in the last few days of negotiations presented a challenge that ultimately proved insurmountable.’ The company, weighed down by debt, said Friday that it was looking for $369 million in financing over the weekend to avoid going under on Monday.”
“At the time, the company had a debt burden of £1.25 billion and warned that Brexit-related uncertainties had hurt bookings for summer holiday travel.The firm has also struggled with increased competition from online travel-booking websites like Expedia.”
The Chinese Connection. Or lack thereof…
In an interesting note, perhaps tied in to some extent with the ongoing US-China trade war, ZH notes that even the sneakily generous Chi-coms (or their proxies) passed on doing the White Knight thing for Thomas Cook.
“Chinese conglomerate Fosun, Thomas Cook’s biggest shareholder, had considered contributing $560 million to bail out the company earlier this year, but ultimately demurred for reasons that aren’t clear.”
Sadly, for those 600,000 unfortunates unexpectedly stranded God knows where by the travel company’s demise, they were largely on their own. Including at Thomas Cook’s own facilities, which over the years grew to include its own airline and hotels.
Dunkirk 2: The Sequel?
“All bookings made through the company have been invalidated, the company said. It typically runs hotels, resorts, airlines and cruises for 19 million customers a year in 16 countries.
“The UK government is now scrambling to get all of its citizens home safelyin what some have called “the largest peacetime repatriation effort in British history,”according to the Sydney Morning Herald. The UK Civil Aviation Authority said Monday that it would be working with the government to bring more than 150,000 British customers home over the next couple of weeks…”
Final thoughts on Thomas Cook’s demise
“The modern Thomas Cook Group formed in 2007 when the UK’s MyTravel merged with the privately-held Germany-based Thomas Cook to create a tour-company behemoth and promising to hasten consolidation in the tour operating industry.”
Sick transit. (Pun intended.) So much for that big idea.
Back in the days before the internet, you booked airline travel and accommodations on your own on the phone. Alternatively, you accomplished that via one of many friendly local travel agents.
We recall the Thomas Cook of the ‘70s and ‘80s with some fondness, as we often used them instead of American Express at various European bureaux de change. We usually got a better deal. Their travelers cheques (that’s the way they spelled it) were also competitive, fee-wise, with Amex. And, back in the day, travelers checks were the safest way to carry currency abroad.
Things, of course, have changed. And changed a bit too much, apparently, for Thomas Cook. The company looks to have expanded considerably beyond its capacity to handle financing of that level of growth. Sad to see them go. And best of luck to the company’s legion of seriously disgruntled strandees.
The China Connection
President Donald Trump buoyed markets late last week and again early this week by claiming China would increase its purchases of US agricultural products as part of a bilateral trade deal.
Meanwhile, China is still in the midst of a catastrophic swine disease epidemic. The country desperately needs mass quantities of actual pork, its most popular meat. And the Chinese people don’t listen to any of that anti-meat prattling by the environmentaloids, either. So they’ve “generously” decided to avoid even higher tariffs on US pork exports. For now. As with previous generosities, we’ll see if this latest promise comes with any new orders.
– Headline image: One of Thomas Cook’s airliners making what appears to be its last-ever landing under that brand. Image via Zero Hedge, via Thomas Cook website now delinked due to company’s apparent bankruptcy.