The mounting human cost of the Thomas Cook collapse

Richard Tyler

Hundreds of thousands of Thomas Cook customers had their holidays brought to a sudden end when the company was placed in compulsory liquidation in the early hours of Monday morning.

The international scale of the crisis, with devastating economic and social implications, has rapidly become clear. The collapse means that the firm’s entire 22,000-strong global workforce have lost their jobs. Some 9,000 of these are employed in the UK, with 6,000 already laid off. The firm was headquartered in Manchester, with 3,000 previously employed in the region.

Many are set to attend a jobs fair at the city’s airport next week in the hope of getting work. In addition, the future of hundreds of foreign hotels and other businesses dependent on the travel company for most of their income, along with the jobs of those working there, are in jeopardy.

Greece Thomas Cook

Boris Johnson’s Conservative government had refused a last-minute appeal to provide up to £250 million to keep the British-headquartered company operational as it sought to reach a deal with its creditors and secure new investment. Instead, the Civil Aviation Authority, on behalf of the government, began the largest British repatriation exercise in peacetime to return the firm’s UK-based holidaymakers. Of the 150,000 Britons on Thomas Cook packages, by the end of Thursday only just over half, 77,000, had been brought home.

Thomas Cook customers faced not just the end of their holidays and extended delays stranded at airports, many were exploited by airlines out to make a financial killing from their desperate position. Some who had not even traveled yet were forced to pay extortionate prices for replacement flights. One couple, a former coal miner and his wife, originally paid £779 in January for a Thomas Cook flight to New York for next month. This week they had to pay more than £6,000 for a replacement. They had booked to celebrate the 53-year-old husband’s recovery from open heart surgery three years ago.

Parma airport board with cancelled Thomas Cook flights

The repatriation, involving hiring aircraft from as far away as America and Malaysia, together with the costs of reimbursing Thomas Cook customers who have paid for future holidays via the industry’s ATOL insurance fund, is estimated to be costing over £500 million and could rise to a staggering £1 billion. The vast majority of this will be borne by the taxpayer.

Industry experts anticipate that the ATOL insurance premium, currently £2.50 per person, will have to rise rapidly to at least £10 as the massive payment for the Thomas Cook failure threatens to wipe out the organisation’s funds.

Tens of thousands of German tourists who have purchased holidays with Thomas Cook may not fare so well, as the insurance scheme there is capped at €110 million, which is insufficient to reimburse every customer. One estimate is that many will be lucky to receive just 50 percent of what they have paid from the scheme.

In Greece, most of the hotels taking guests for Thomas Cook have not been paid since mid-June. The Greek tourist trade association, Sete, estimates the losses at between €300 and €500 million. Last year, 10 percent of the 30 million holidaying in Greece came with the company, mainly to the islands of Rhodes, Kos, Corfu, Zakynthos and Crete.

Nearly 50 Greek hotels, 26 on the island of Crete alone, may have to close their doors in the coming days, according to Nikos Chalkiadakis, president of Crete’s Hotel Owners Association. Thomas Cook had not paid a single hotel with which it contracted on the island since July 15. “It is a massive blow, as big as the finance crisis some years ago,” said Chalkiadakis, adding that “the impact on my business will be considerable since Thomas Cook owes me some €650,000.”

On the island of Cyprus, up to 80 percent of beds in many hotels were sold via Thomas Cook, with businesses owed around €50 million.

Visibly upset Thomas Cook staff and passengers at Palma de Mallorca Airport in Spain as the collapse was announced

The company was also responsible for bringing eight percent of British and 10 percent of German holidaymakers to Turkey—between 600,000 and 700,000 tourists this year. The owner of a small beach-side kiosk selling boat trips and paragliding said, “If hotels shut, the whole infrastructure suffers. Food producers, farmers, laundry and cleaning services, all will get rid of people.”