How bad is the Thomas Cook bankruptcy?
Many of the roughly 600,000 tourists left stranded by the bankruptcy of Thomas Cook, the world's oldest tour operator, are still waiting to return home. Some 22,000 employees lost their jobs overnight. Journalists veer between anger and gloating.
Uncertainty is spreading
Business paper Ziarul Financiar sees the Thomas Cook bankruptcy as a harbinger of a global recession:
“Thomas Cook was the travel agency of the average Brit. If a giant like this disappears, for whatever reason, then the sense of insecurity and uncertainty about the future of the economy will deepen. ... On top of that there's the huge scandal of Brexit and its effects. People will automatically assume that other nasty surprises are just around the corner and they will limit their consumption. And hey presto: you have a recession.”
Package holidays should be abolished
For 24 Chasa the insolvency of Thomas Cook is good news:
“Tour operators like Thomas Cook have driven the so-called tourism investors, driven by their greed for profit, to build more and more hotels and to lower prices beyond any reasonable level in order to meet current demand. The hoteliers built higher and higher and claimed ever larger areas. This is how the package holiday business model first destroyed Spain and then Bulgaria. Small and medium-sized businesses don't get anything out of it. The bulk of the profits from the apparently huge onslaught of tourists ends up in the pockets of the travel companies that only act as intermediaries. They have not understood that people are gradually getting fed up with this and that the world is no longer the same in the era of the Internet.”
Emergency loan for Condor is excessive
The German government has granted an emergency loan to the airline Condor, a Thomas Cook subsidiary. The Neue Zürcher Zeitung is surprised, and not just by the amount in question:
“A notable aspect is that the six-month emergency loan of 380 million euros is very generous even though the state - and thus the taxpayer - has no guarantee that it will be repaid. When Air Berlin became insolvent roughly two years ago, the German government provided a loan of 150 million euros subject to certain conditions which has only just been paid back - without interest. The accepted risks are enormous. While Air Berlin had 8,000 employees at the time, Condor has 4,900. Viewed from this perspective one has to ask why such a large amount is being made available to a leisure airline.”
Loss of tourists a serious blow for Cyprus
The collapse comes as a bitter blow to Cyprus, the Cyprus Mail writes:
“With the collapse of Thomas Cook, Cyprus is looking at the loss of 45,000 tourists by the end of the year, almost €200m in revenues, hoteliers will be owed €50m and some units will now sit empty for the rest of the year. On top of that airfares will soar. ... With pressure already on over Brexit, bookings from the UK were almost non-existent for 2020 due to the uncertainty. ... Thomas Cook accounted for 5 per cent to 6 per cent of arrivals so that alone looks set to negate the gains made over the past couple of years.”
Turkey's liveliest sector in jeopardy
Turkey's tourism industry will also suffer, Habertürk fears:
“The bankruptcy of this tour operator which brought around 600,000 tourists to Turkey every year has left customers stranded at Antalya airport. Turkey has responded by taking action at the ministerial level. The company is active not only in Britain, but also in Germany and Russia. This situation for which we bear no blame could have a negative impact on tourism, our most dynamic economic sector.”
Greece too dependent on tourism
Greece earns good money with tourism but this can also be dangerous for the country, To Vima points out:
“For years people have been warning that the dependence of Greece's tourism sector on two or three all-powerful players entails unpredictable and largely uncontrollable risks. The huge economic dependence on tourism revenues makes Greece vulnerable to the collapse of giants like Thomas Cook. ... Of course, tourism will remain dominant, nevertheless we clearly need growth in other sectors, too. Because the exploitation and use of the sun, the sea and the environment also has its limits.”
The first spectacular Brexit bankruptcy
The tourism company is the first major victim of Brexit, Deutschlandfunk explains:
“True, the British travel company has been up to its neck in problems for years now. Nevertheless the uncertainty about a no-deal Brexit must have been the last straw for the oldest travel company in the world. ... With a cold Brexit, an even weaker pound and even less customer buying power looming, the banks pulled the emergency brake. And quite rightly, according to their logic. Nevertheless, with this move they have presented the world with the first spectacular Brexit bankruptcy, which could be followed by many more. Because it will be the same scenario as in any crisis: the strong companies will survive, while those that are already weak will not.”
Zombies on the zero-interest drip
Thomas Cook is just one of many companies that have survived this long only thanks to artificially low interest rates, writes Die Presse:
“The fact that this big zombie has now been caught is an extremely bad omen. Clearly, the unhealthy combination of Brexit foreshocks and a weakening economy is rendering the zero-interest cash injections largely ineffective. If this thesis proves correct - and there is little to be said against it - then a lot of trouble is heading our way. Thomas Cook is not an isolated case. According to a study by the Bank of America, nine percent of the 600 largest listed European companies are also 'undead'. If you include smaller companies the estimates go up to 18 percent. In the US, one in five companies is allegedly still alive only thanks to the Fed's interest-rate injections.”
Young people don't need travel agencies
Travel agencies have outlived their usefulness, says Lidové noviny:
“Anyone who interacts with young people aged 20 to 30 knows how they organise their travel. They find cheap flights, connecting trains or buses and inexpensive accommodation online and then set off without requiring anyone to organise everything for them. ... But anyone who believes that the collapse of the big travel agencies will provide relief from mass tourism and air travel and thus benefit the Earth and its atmosphere is mistaken. Mass tourism is flourishing more than ever. It's just that nowadays it requires ever fewer travel agencies.”
Package deals still attractive
The Financial Times takes a different view:
“Despite Thomas Cook's collapse, the package holiday remains for many an attractive proposition. It is convenient and (often) low-cost. The big package holiday companies can offer hoteliers what they want: guaranteed, multiyear bookings, without the burden of operating their own sales operations. That grip on key Mediterranean properties, and in the case of Tui, Thomas Cook's larger rival, a direct equity stake in hotels, is a formidable barrier to competition. The name Thomas Cook may not survive, but the holiday package will live on.”
Only the tourists didn't know
ABC criticises the British government's role:
“There are economic reasons for the collapse, such as the progressive decline of the pound and rising petrol prices. The climate is also a factor: last summer's heatwave caused British demand to fall. ... The creditors and the partner companies knew about the company's agony and until the end tried to find a way out for the agency. The British government was also aware of the situation but tolerated it, trying to patch things up with a few ineffectual plasters. Hundreds of thousands of customers plus 20,000 employees have now fallen victim. Everyone saw this coming yet nobody warned the holidaymakers. Yesterday they were the last to hear about it.”