Perfect storm destroys Thomas Cook

Downing Street has launched an official probe into the corporate collapse.

25 September 2019 | Business

Thomas Cook failed because it didn't move with the times. – Neil Wilson, Analyst:

Roland Jackson - The brutal failure of travel firm Thomas Cook was sealed as a rescue floundered, but it was also sparked by mismanagement, the internet, geopolitical unrest, and Brexit, according to analysts.

The venerable but debt-plagued holiday group, whose presence on the high street dates back to 1841, ended in acrimony just after 0100 GMT on Monday as shareholders and banks rejected a plea for more money.

"There was no choice. It was a case of all of the investors and debt-holders seeing this as a dead company," said Helal Miah, investment research analyst at The Share Centre.

"So nobody was really prepared was fork out any more cash," he told AFP.

That decision prompted the 178-year-old business to shut up shop, axe 22 000 staff worldwide, and leave some 600 000 customers - including more than 150 000 Britons - stranded abroad requiring repatriation.

Official probe

London has launched an official probe into the corporate collapse, according to a Downing Street spokeswoman who cautioned that there were "a number of complicated reasons behind the failure".

Industry watchers also argue that the company was blighted in the longer term by a series of bad decisions and unfortunate circumstances which helped prompt its downfall.

"There's plenty of factors in its demise; mainly too much debt," said analyst Neil Wilson.

"But ultimately the debt was the symptom of the ailment - Thomas Cook failed because it didn't move with the times," he added, citing its inability to embrace the web.

Poor decisions

Poor management decisions - chiefly the disastrous merger with rival MyTravel in 2007 - left Thomas Cook loaded with unsustainable debt and burgeoning costs, he noted.

The group then embarked upon a drastic restructuring in 2013 as it sought to shore up its finances and slash costs.

Its performance was also hit by geopolitical unrest in key markets Egypt, Tunisia and Turkey.

And the Brexit referendum vote in 2016 and the accompanying slump in the pound also weighed and contributed to three profit warnings.

Unusually hot weather last year meanwhile persuaded many Britons to stay at home instead of seeking the sun on the Mediterranean.


By last Friday night, the company's share price collapsed to hit just 0.0345 pounds, which contrasted with about £1.20 in early 2018. The stock was suspended on Monday.

"If we go back, it made a number of [bad] acquisitions," added Miah.

"MyTravel was one of them - integration of that business hasn’t gone too well, so that's one issue.

"After that you've had a whole host of other problems," he told AFP.

"You've had terrorism in Turkey and Egypt - two of its most popular destinations, then you've had unusual weather patterns - and last year's heatwave resulted in so many people not travelling and staying in the UK.

"Then on top of that, you've got the Brexit uncertainty and the impact it creates on sterling."

He added that the Brexit-hit pound has weakened sharply against major currencies, ramping up costs for both the company and its customers.

Rescue package

Meanwhile, Thomas Cook sought to shore up its finances earlier this year, with Chinese peer Fosun -which was already the biggest shareholder - agreeing to inject £450 million into the business as part of a £900-million rescue package.

However last weekend, the UK holiday firm failed to secure another £200 million from private investors which banks insisted it needed to survive.

"Banks pulled the rug out from under it. The Fosun deal looked good to go but the banks wanted another £200 million," added Wilson.

"Once that was not forthcoming the only way was down and out."

Miah added that the request for more cash "just really was the final nail in the coffin".


And he argued that management was to blame over strategy - and was unwilling to adapt to the internet age, leaving it exposed to sector-wide intense competition.

"The real structural problem for them - and this is probably the biggest management failure - is the fact that since the early days it didn't foresee that the internet was going to be such a strong and dominant force and it didn’t invest enough in that," Miah told AFP.

"It still had a huge high street portfolio which is very costly and it's seen other players leap in front in the online market and take market share."

He added: "We cannot entirely blame Brexit here." – Nampa/AFP

Similar News


Manufacturers face 'crippling blow'

1 day - 14 July 2020 | Business

The Namibian Manufacturers Association (NMA) yesterday “strongly condemned” government's decision to phase out “sector specific special income incentives granted to registered manufacturers” by the end...

'Timing of NEEEB most ­unfavourable'

1 day - 14 July 2020 | Business

Jo-Maré DuddyAmid rife speculation that the Namibian Equitable Economic Empowerment Bill (NEEEB) might soon be tabled in parliament, the Construction Industries Federation of Namibia (CIF)...

//Karas youth can help food security

1 day - 14 July 2020 | Business

The youth in the //Karas region should organise themselves and start agricultural projects to ensure future food security, Swapo's regional coordinator, Matheus Mumbala, has said.Mumbala,...


1 day - 14 July 2020 | Business

NOC accuses UAE Libya's National Oil Corp (NOC) accused the United Arab Emirates of instructing eastern forces in Libya's civil war to reimpose a blockade...

Fears of Chinese monopoly in local cement

2 days ago - 13 July 2020 | Business

Phillepus Uusiku - West China Cement has proposed the acquisition of shares in Schwenk Namibia, which owns in 69.83% in Ohorongo Cement.West China Cement is...

Company news in brief

2 days ago - 13 July 2020 | Business

SA govt to make SAA funding commitmentThe South African government is "on course" to provide a funding commitment for the restructuring of loss-making South African...

Tax, EPZ changes nail manufactures

5 days ago - 10 July 2020 | Business

Staff Reporter – Current manufacturing incentives which have been repealed and the phasing out of the Economic Processing Zone are “drastic” changes which will hurt...


5 days ago - 10 July 2020 | Business

Airbus deliveries hit 16-yr low Airbus deliveries rose 50% in June compared with May and reached their highest level since the coronavirus crisis spread to...

Namibia's airport gears for operations

6 days ago - 09 July 2020 | Business

Namibia's flagship airport the Hosea Kutako International Airport (HKIA) is ready for its restart plan as borders are going to gradually open under the provisions...

Farmers rue lack of post-resettlement support

6 days ago - 09 July 2020 | Business

By Edward Mumbuu JnrSome resettlement beneficiaries have expressed discontent in governments post-resettlement support programme, which they suggest, derails the productivity and profitability of such farms.The...

Latest News

War vets furious over housing...

8 hours ago | Infrastructure

ILENI NANDJATOONESIPeople's Liberation Army of Namibia (PLAN) pioneer war veterans - most of whom are still living in poverty and squalor - say they are...

Officials 'sabotaging' Swapo-led government

8 hours ago | Government

KENYA KAMBOWERUNDUNational Council audit committee chairperson Lebbeus Tobias has described the neglect of borders and challenges faced by border staff as “sabotage” of the Swapo-led...

Accord war vets the necessary...

8 hours ago | Opinion

War veterans who complained in today's edition of Namibian Sun that government is delaying their so-called 'tokens of appreciation' such as houses and start-up capital...

Fishing company delivers on promise

8 hours ago | Social Issues

KENYA KAMBOWEKASOTEA fishing company has delivered on its promise to build a home for a poverty-stricken family of seven at Kasote village in Kavango West.Two...

Wife killer's brutality 'unsurpassed'

8 hours ago | Justice

JANA-MARI SMITHWINDHOEKHigh Court Judge Naomi Shivute has described Andries Hermanus Johannes Scott's brutal trampling to death of his wife, Anna Scott, in August 2017 as...

Hefty fines for pangolin smuggling

8 hours ago | Crime

ELLANIE SMITWINDHOEKTwo new cases of wildlife crime were reported last week and three suspects were arrested, while two men found guilty of the illegal possession...

Half of Namibians can't afford...

8 hours ago | Disasters

ELLANIE SMITWINDHOEKThe number of hungry people in Namibia has increased by 100 000 in over a decade, according to a United Nations report. However, there...

Corona relief from Agribank

8 hours ago | Agriculture

ELLANIE SMITWINDHOEK Agribank recently kicked off its countrywide stakeholder information workshops on its coronavirus relief stimulus package. The bank introduced the stimulus package on...

WorldSkills Namibia celebrates World Youth...

8 hours ago | Education

ELIZABETH JOSEPHWINDHOEKNamibia today joins the rest of the world in marking World Youth Skills Day, an annual event which recognises the importance of equipping young...

Load More