After the downfall of the Icelandic budget airline, Wow Air due to bankruptcy, another 178-year-old trustworthy brand, Thomas Cook also collapsed giving twin blow to the European travel sector.
The ailing airline, Wow Air, shut down its operations in March due to lack of financing, leaving 2,700 fliers stranded and hurting the country's economy.
The last-ditch rescue bid proposed swapping existing debt into shares, leaving Fosun holding the majority of Thomas Cook's tour-operating business while creditors would have controlled its airlines. The company had debt of almost 2 billion pounds as of March 31, according to data compiled by Bloomberg.
But the challenges eventually proved insurmountable. A group of hedge funds began to organize to block the plan because it would stop them from cashing in on holdings of credit-default swaps that pay out when a company defaults. There was also concern customers would stop buying vacations and flights from Thomas Cook for fear the company wouldn't be around to honor their bookings.
The 178-year-old travel firm is being sunk by a number of factors: financial, social and even meteorological. Weather issues, stiff competition from online travel agents and low-cost airlines, Brexit and political unrest around the world are said to be the disruptive factors.
The failure of the Thomas Cook owes to the nimbler online rivals ate into the company's core business and a succession of turnaround plans failed to stick. The sluggish European vacation market and uncertainty over the economic impact of Brexit also more recently crimped demand. Many travelers in Europe changed their travel habit by putting together their own holidays and not using travel agents. In May, Thomas Cook reported a £1.5bn loss for the first half of its financial year, with £1.1bn of the loss caused by the decision to write down the value of My Travel, the business it merged with in 2007.
Fosun Tourism Group said in a statement Monday that it was "disappointed" Thomas Cook was unable to find a solution. Shares of Fosun Tourism Group dropped as much as 5.5% in Hong Kong on Monday before paring losses. They were down 2.8% as of 11:49 a.m. local time.
History of Thomas Cook
Founded in the 1840s by a Victorian entrepreneur of the same name, Thomas Cook started out by running train trips through the English Midlands. The business expanded as Britain's growing middle class discovered they had more time -- and money -- to discover the delights of Europe.
Briefly absorbed into the state rail company soon after World War II, the company got its biggest boost in the 1970s and 1980s as Britons sought the sun on a cheap budget. The ad slogan "Don't just book it, Thomas Cook it" entered the national psyche.
But Thomas Cook labored under its large debt burden and the costs associated with maintaining a high-profile presence in Britain's provincial towns. The company, with more than 500 locations nationwide, generated cash flow-per-employee of just 188 pounds last year.