December 2, 2019 • 41 mins
In late 2019, a travel company in the UK went belly-up overnight, stranding thousands of people who were in the middle of a vacation. Find out about the history of Thomas Cook and how its demise was no holiday.
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Speaker 1 (00:04):
Welcome to Business on the Brink, a production from I
Heart Radio and How Stuff Works. I found out long
ago it's a long way down the Holiday Road, and
six hundred thousand people learned that same lesson when a
famous travel company suddenly went out of business. The collapse
required the British government to figure out how to get
(00:25):
more than one hundred thousand citizens back home. This is
Thomas Cook on Business on the Brink. Hi, everybody on
Jonathan Stricklin and I'm Ariel Casting, And this week we
(00:46):
aren't doing a listener suggestion. We're doing one that was
recently in the news when we were deciding to record this.
It's a monumental story, one that also I think a
lot of Americans, like you and I weren't. You know,
we probably weren't really that familiar with this company. I
certainly I was not either. This was actually this is
(01:08):
a company, Thomas Cook is a company that to any
listeners in the UK, you guys know all about this,
but we hadn't really heard about it. In fact, I
remember it was used as sort of a joke in
a couple of British series that I watched, and I
had no idea just went right over your head exactly.
And it was one of those those regionalized bits of
(01:30):
humor that did not translate to me even though they
were speaking English. And it's weird too because the Thomas
Cook Group, which is what the company was called once
they shut down, uh, the oldest long standing travel agency ever. Yeah,
more than a century old. And they did do excursions
all over the world. So they were just most popular
(01:53):
in UK, which is where they started. Yeah. And in fact,
their founder, by no surprise, was named Thomas Cook Group. No,
he was named Thomas Cook and the company was named
Thomas Cook at first. Yes, So Thomas Cook started off
not as someone who was planning out holidays for his
fellow British citizens to go trapesing about in Tunisia. That
(02:17):
was not the purpose. Uh, that's not how he got started.
He got started on a much more sober endeavor. Oh
I see you did there. That's very clever, Jonathan. Yes. Uh,
Thomas Cook was a huge fan of temperance. He did
not like alcohol and in fact, he wasn't even like
(02:38):
a jet setter. He was a cabinet maker and a
former Baptist preacher. Yes, And he started his career as
a travel agent by getting Temperance supporters around England by
train to their meetings. There were twelve mile trips, one
day excursions. Very small, yeah, but this was back in
eighteen forty one, and while the trips were small, the
(03:03):
number of people was pretty large. He was getting up
to people to go on some of these trips. And
what it really came down to is that you're talking
about a lot of people who had not had any
experience booking any sort of travel, So to them it
was extremely intimidating, and he, because of his passion for
the cause, was willing to take on the burden of
(03:23):
responsibility to do all that work of the actual booking
of tickets. So he handled all of that on behalf
of the people, and that way he could ensure that
he would get a passionate crowd to show up to
these temperance gatherings and they wouldn't you know, the the
the barrier of getting on a train and figure out
(03:44):
where you're going and everything that was lifted off of
them so they were more likely to participate. He he
took that passion for getting these these people to these
good causes, what he considered good causes at least I'm
not gonna say it's not a good cause. All I'm
saying is that there's one drinker in this podcast, and
it's not me. Look, just because you're allergic and and
(04:09):
and by drinker, I mean Ariel occasionally as a drink,
and then Jonathan laughs at me. He expanded his trips
to Sunday schools. So now he was organizing trips for
people to get to temperance meetings and Sunday school where
those kids were getting lit off the sacramental line. No no,
so he Yeah, this is obviously very modest, But what
(04:32):
happened was that he began to learn that he was
really good at this. He was good at organizing all
these details. He was good at handling this and keeping
stuff on track for other people, and he was starting
to see the promise of this being a let's say,
more viable career than making cabinets. Yep. So he he
(04:54):
ran his very first commercial trip in all the way
to the far off land of Liverpool. Yeah, he was
one years too early for the Beatles, so everyone was
very disappointed. I know, I asked for a refund. So
by eighteen forty six he began offering tour trips to
Scotland and made a lot of money by not taking
anyone back out n till they paid twice as much.
(05:16):
It seems smart to me. No, I'm just that's me
being totally snouted. It still sounds smart to me. He
He also that these were trips where people were taking
train and steamboat trips, so again like he's coordinating multiple
legs of a trip, something that a lot of people
would have found intimidating or maybe even impossible to arrange.
(05:38):
You know, you might not even know where to turn
back in the mid nineteenth century without the internet. Yeah,
there's no internet, you know. In fact, trains and steamboats
are pretty darn neew themselves. And on top of that,
he began to produce guide books so that people would
know more about the location they were going to visit,
(06:00):
and he would answer very important questions such as is
it safe for ladies to travel to the Highlands. That
is not a joke. That really was one of the chapters.
It is important to know I have seen Outlander. Well,
he moved from transportation for these trips to actual tours,
so kind of yes, ending the guide books, Yes, yeah,
(06:23):
this would be eight So now you could book an
entire inclusive tour. And again, like he was seeing the
things that people really liked about this sort of this
proto travel agency that had grown kind of organically. They
liked the fact that they could go to places and
have these experiences, and they liked being able to put
(06:46):
more of the planning side on somebody else so they
could just enjoy their trip. It's a holiday, you wanted
to be relaxing. Well, his first year Pean tour started
in England and ended at the International Exhibition in Paris.
End to facilitate multi country travel, he started offering foreign
exchange services. Yeah, so pretty pretty forward thinking at this point.
(07:10):
And then he began to offer holiday packages, which is
kind of what we would think of for your typical
travel agent these days. Like that's the kind of thing
where you know, it's the transportation, hotel and meals exactly
and uh and so again taking all that burden off
the individuals so they can just enjoy their trip. In
(07:30):
eighteen sixty five, he opened a store in Fleet Street, London,
just down the down the way from a charming barbershop.
Don't try the pies. Uh, And he had his son
John start working with him. Yes, and uh, they also
would sell travel accessories. They also would offer coupons with
(07:53):
with hotels that they had partnered with, so that that
way they could direct business to specific facilities for a
discounted price, and those hotels would do things like offer
free meals and such. Yeah. So this was one of
those deals where because of he was working in such
volume he could help out hotels in distant places, they
(08:17):
could help him out by cutting him a deal. Uh,
this would turn out like we're still talking about the
early early days of this company. But when you sit
there and think about this, these relationships between a travel
agency and these other parties like hotels, you start to
see where the potential impact is going to be when
we get to the sad part of the story where
(08:38):
the company is unraveling. Yeah, but we're not there yet. No,
we cut a couple of centuries to go, so a
century a century. In eighteen sixty six, they started offering
tours to the US. Yeah, I started having to provide
English to American interpreters so that people can understand each other.
Very important living in the South, where they say the
(08:58):
Southern accent is close to an old English accent, which
probably was not that old anymore. Uh, well, at that
point it was a newer English accent. You needed people
interpreters in the South because we can't hear as fast
as other people talk. It's true, it's true, we can't
think as fast as other people talked to In eighteen
seventy one, they partnered with an American What do you
mean we can't think as fast as the other people talk.
(09:22):
Point case. In eighteen seventy one they partnered with an
American businessman to help with their US tours, but it
was not a good partnership and it eventually ended. Yes,
I just wanted to put that out there. Uh, it
is a jump ahead. Yeah. Also in eighteen seventy three
they had a London to London tour, which sounds like
it would be super short, but instead it was London
(09:44):
to London via the rest of the world. Was it
in a hot air balloon like around the world in
eighty days? It was not. It cost two hundred guineas pigs. No,
not like a guinea was one pound one shilling. Because
the English have determined that the monetary transaction should be
(10:05):
as confusing as it possibly can be. By this time,
Thomas's son John was a partner. They changed the name
of the company to Thomas Cook and Son, and John
was focusing a lot on the commercial end, because Thomas
was really good at organizing all this, but not so
much advertising. Yeah, and uh, John was getting more and
(10:26):
more frustrated about that, so that by essentially said you
know what, Dad, you really you've earned yourself arrest. Go
have a stiff drink. Oh oh, I almost forgot about
the temperance stuff. Yeah. He never stopped with that opinion.
So John ended up taking over the business. Thomas stepped down,
(10:47):
and John had sons of his own who also joined
the family business, three of them, and they were really
good at running it. Uh. Under John and his sons,
they started delving into military transport, postal transport, and tours
to the Middle East. Within ten years they had locations
all around the world and a couple of years after
that they had sold over three million tickets. Wow, so
(11:12):
getting towards the end of the nineteenth century. In eighteen
nineties six, they then also got a great privilege, a
great honor. They were named the official travel agent for
the Olympics in Athens, which would be the first modern
version of the Olympics. That's a pretty big milestone. I
think it's a great thing to have put on your brochures.
(11:33):
I agree. In nineteen they started delving inte luxuries such
as recreational air travel, and things were going really well.
And that's the end of the story. I don't we
got we got a lot of sad stuff to go through.
But it's actually a very complicated story. So before we
get into that, I recommend we take a little break good.
(11:55):
I need a stiff drink, so we're back Ariels a
little tipsy. But we're now going to continue with the
story of Thomas Cook. By the time we get into
the nineteen twenties, uh, the grandsons of Thomas Cook, John's
(12:16):
three sons. Yes, at that time, I think they in turn,
we're ready to retire, right, so the family business was
about to no longer be a family business. That is correct.
They sold Thomas Cook, Oh goodness, to the Compania International
de grand espress Europeans. That was horrible. It was a
(12:41):
good attempt at our French accent. I haven't done French
since seventh grade. Yeah no, Well, there's that whole Renaissance
festival time where you played a French person accent and
actual communication are different things. So yes, so this French
company comes in and c i w L and they
(13:02):
purchase the Thomas Cook Company. Some people say that the
reason why this happened was that the Cook's grandsons were
concerned with the financial health long term health of the
Thomas Cook Company, and that they wanted to get out
while the getting was good. Uh. C i w L
had another high profile company under like a name and
(13:27):
travel that is infamous, right, that would be the Orient Express.
I would say it's almost more infamous in literature, yes,
because murder on the Orient Express obviously, but yes, as
the Orient Express us the same company that owns the
Orient Express But the c i w L would not
hold on to Thomas Cook for very long, not as
(13:52):
long as the family owned it. No, within less than
in less than twenty years, Germany occupied Belgium, Yes, which
is where the headquarters for c i w L were.
And and that was because World War two is happening,
and the British government stepped in and nationalized Thomas Cook,
(14:13):
folding it into British Railways. Yeah, and this is not
that different from what the United States did in the
outbreak of World War one when they essentially appropriate all
the radio stations, which is how we got our c
A right, So, which is again you you can kind
of understand it from a national security standpoint, right, you
cannot have a major transportation company being operated by a
(14:39):
foreign power during a time of war. It just doesn't
it doesn't make sense from a national security standpoint. So
that is why the UK government nationalized Thomas Cook. Well,
and after that because after war people want to save money.
You know, they started losing income, they started losing revenues
because people in more economical travel packages and Thomas Cook
(15:03):
did sort of focus on the middle class and providing
reasonably priced Yeah, but they were having a hard time
keeping up with this this cheaper demand. And on top
of that, you know their government run governments are slow
to make change. Yeah, governments don't have to respond to
(15:23):
the market the same way that a private company would.
And so there were some really some big issues with
how the government was running this. Um. You know, their
goal was not two They had different priorities than a
private company would. So it's not that it was necessarily worse,
(15:44):
it was just different and not necessarily what customers were
wanting exactly. So that problem got solved when a bank,
a hotel, restaurant group, and an auto group walk into
a bar. Yeah why the long face. Yeah, they they
banded together and they decided that they would purchase essentially
(16:05):
that Thomas Cook from the British government, making it a
private company. Again. That was in the nineteen seventies, and
this was again where the company was mainly focused on
these all inclusive packages. Right, you you buy the whole
holiday from Thomas Cook and you don't have to worry
about anything. And because you had the auto company, you
(16:25):
had the hotel and restaurant company, you had a bank
in there, they were able to meet a lot of
those with their own resources, and whatever they didn't have,
they could end up partnering with other companies. It just
makes everything more streamlined. In the eighties, Thomas Cook had
a pretty big presence in the US due to travelers checks,
(16:46):
because they were actually one of the they were one
of the first companies to ever operate travelers checks, or
or a precursor to them. Yeah, they were so big
that they even opened a computer center in the United States,
United States, and yet I still had heard of that.
I was about to say, by the early nine nineties,
they were one of the world's leading for and exchange retailers.
(17:07):
They had acquired a company called Deek International, which got
them to that point, and then they were acquired by
a different combo group of businesses, so the the hotel,
restaurant group, the bank and the auto company sold it
to a different bank and travel conglomerate company this time
group of companies, this time to West Dutch Land Space.
(17:30):
That's Deutsche LANs Bunk. Listen, why don't you let me
say it if you could say it better West LB
and the LTU group, which was an airline like it's
Dutch instead of Deutsche. Uh. They then acquired a bank subsidiary,
enter Payment Services Limited in nine and that made them
(17:50):
the largest supplier of travelers checks outside the United States.
And then they sold their travel management business to m X,
which gave a mex about tempers of Thomas Cook's annual revenue.
They really, uh, we're deciding they needed to start folk streamlining. Yeah,
and when we've seen this many times where a company,
(18:11):
you know, it diversifies to the point where it realizes, no,
now we need to cut back on some areas because
we've lost so much focus that we're not able to
function properly. Well, this is just the tip of their
going back to a single focus. Oh yeah, no, we're
gonna it gets a lot worse before it could. Well,
it doesn't get better, but spoiler alert, it does not
(18:32):
get better. It just keeps getting worse. Well, it gets
slightly better for a little bit. Because LTU, the airline
that was in partnership with west lb in owning Thomas
Cooke about out and so West Alby bought a whole
bunch of different travel operations, airlines and tour groups and
things like that and rolled them all into the company
under the brand JMC for John Mason Cook, Thomas Cook's son,
(18:56):
and then took those properties and made their own airline. Yeah. Uh,
this would also end up being a big part of
the problem in a few years. It certainly would. So uh.
They also ended up launching a website in n and
we're one of the first companies, in fact, the first
(19:17):
travel agency in the UK to offer travel packages that
you could purchase online. So that a lot of these companies,
when we talk about them, that this is the sort
of thing that we tend to to point out and
say moment right that they failed to adapt to changing times,
at least as far as web access. The web, the
(19:39):
ability to purchase things on Thomas Cook was on the
front line. Yeah, but other elements of that changing landscape
would be things they could not compete with. Exactly. Once
we reached the two thousands, Thomas Cook decided to pare
down their focus to just travel. So they sold their
financial division service and they sold their foreign exchange service
to Travel X, and so then travel X also would
(20:03):
be able to use the Thomas Cook branding on their
checks for five years as part of this deal. So
it was smart, yeah, kind of trading on that name also,
just to make that transition a little less rocky for
anyone who was actually using those things, So that that
helped a bit. That same year they finalized the sales
(20:24):
of the divisions, they also got acquired again again by
Condor and Necroment Touristic a G in Germany. Why did
you give the easy one? To say, because I saw
it ahead of time and I jumped on it. So
they became Thomas Cook a G at this point. And
to me, it's amazing how many times this company had
(20:45):
been through these different mergers and acquisitions. They're not done yet.
But before we get to their next acquisition, they launched
the airline in two thousand three officially, yes, Thomas Cook Airlines.
And then we get back into the mergers, acquisitions and
names ages. This one actually is possibly the most important
one of all of Thomas Cook's history. Uh. In two
(21:08):
thousand seven, they merged with another company they might Travel
Group PLC. And this time the company would be known
as Thomas Cook Group p l c. The name that
they ended with, and this was it was meant to
expand the reach of Thomas Cook to new regions that
otherwise they had not had a lot of presence in,
(21:29):
like Scandinavian countries, and they were doing it in an
effort to also kind of consolidate things and ultimately save
some money. Yeah, they're hoping these moves would save them
about seventy five million pounds a year. Yeah. And then
they also merged operations with an organization called Cooperative Group
(21:49):
and the Midlands Cooperative Society. And by combining all these
they became the largest travel agency exactly, the largest chain
of travel agencies in the United Kingdom. They had more
than twelve hundred physical shops, most of them located in
what the Brits called the high streets. High streets are
(22:11):
like the shopping districts. But here's the problem. We've seen
over and over again how mergers and acquisitions often the
process is an incredibly expensive one, and often you're also
looking at combining the debt of two, sometimes very large organizations,
(22:32):
which means you've got even more debt to deal with.
That was the case with this merger. Well, and then
on top of it, you've got the travel industry changing
to more online and they've got all of these shops. Yeah,
so you've got overhead, You've got a billion dollars in
debt by about that's about twice as much as what
(22:54):
Thomas Cook had in two thousand seven. Before, just as
this merger was taking place, you had the fact that
online it wasn't just that you could book things online.
A lot of the grunt work that travel agents would
do had become much easier to do yourself online. And
that's true. So yeah, so, like the reason why the
(23:17):
average person would go to a travel agent was largely
because I find this process intimidating. I want to hand
it off to someone who knows what they're looking for.
They already know the the reputable places, but with the
Internet suddenly doing that research became much easier, and in fact,
for a certain type of person, it's fun. I sometimes
(23:40):
enjoy it. Lately, from my last couple of trips, I've
used a travel agent because it's it's I mean, they
don't cost me anything. Usually they get paid through their
partnerships at hotels and things like that, and so I
find it much more relaxing to say, here's what I want,
find me something within my budget. Yeah, I would have
(24:01):
never stated that amazing Murder Hotel if I had done that.
You're gonna have to tell me more about that. Let's
take a quick break, all right, we're we're now that
I've caught Aerial up on Murder Hotel, I'm never going
to sleep again. Yeah, she's been hitting the drink twice
(24:23):
as hard. Now we're gonna finish up and talk about
the precipitous drop off the brink that Thomas Cook went through.
And it was this was something that happened so suddenly
that it took a lot of people by complete surprise.
Even even people who had said, yeah, I knew that
they weren't doing well financially, were shocked at how fast
(24:45):
this unraveled? Well, you never think that somebody's just going
to close overnight when they've got tons of people all
around the globe. So how we got there? In two
thousand seven, Like we said before the break, they had
more brick and mortar location than any other travel retailer, right,
but the travel industry as a whole was shifting online
(25:06):
so quickly that that was not an asset. It was
actually a liability, yes, because it was all that overhead,
so much overhead, unlike an airplane with very little overheads,
it's all it's all underfoot. In two thousand eleven, the
company sought out one d and twenty five million dollars
dollars of pounds I believe dollars. Yeah, every report I
(25:28):
saw was posted in a American news journal, so I
just assumed that that means we're talking dollars, but million.
Whether it's dollars or pounds, there's a lot of money,
a lot of money. And they did this too, tied
over their cash shortage. Yes, so this was like a
(25:48):
they were in a real serious cash crunch that they
just didn't have the money to keep operations going. On
to billion dollars in debt. Yeah, so this this was
essentially to keep the lights on and to be able
to pay their their staff. You know, keep in mind
their staff. It's not just travel agents. We're talking about
flight crews, We're talking about you know, paying for the
fuel for your your aircraft. There's tons of things that
(26:11):
are part of this gargantuan business at this point. Yeah,
it's it's mind boggling. Yeah. The next year, the company
announced it was going to restructure and in the process
closed two hundred of its stores, and in the company
announced that it was going to streamline by merging their
airlines in Belgium, Scandinavia, the United Kingdom and Germany into
(26:32):
a single division, and in they announced a strategic partnership
with a Chinese investment group called Folson International, which looked
like it might have been a saving grace. Looked like
it looked like it. It wasn't. The first half have
two eighteen, the company was seeing a huge drop off
(26:53):
in customers. Yes, and the reasons for this are are multiple, Like,
there's no one cause we can point to and say
this is why people traveled less. There actually quite a
few different reasons that contributed in some way, shape or form.
For example, you've probably heard if you if you're not
(27:14):
in the UK, you've definitely heard about it. If you're
in the UK, you're living it. The Brexit process right.
So Brexit, some people have argued, has discouraged a lot
of travel, so a lot of people not knowing what
was going to be in store for them, you know,
financially or legally, just to move in and out of
(27:37):
countries in the EU, for example, they held off on
holiday plans. So that was one argument. Another was that
in the UK had an unusually warm winter, and in
the UK winter is when a lot of Brits fly
away to get to someplace that ain't so gosh durned
(27:58):
dang cold and gray. Yeah, I'm one of the coldest
winters I ever spent. Was a June in the UK. Yeah,
that's how cold it can get there. Yeah. Now I
was in Scotland, the northern regions of Scotland and it
got chilly at night. No, but but yeah, it's it's
I mean I always think about when I go to Orlando, Like,
if I go to Orlando in the summer summer months,
(28:21):
I see one type of uh tourists all over the place.
But if I go in the winter months, it's almost
all Brits. Yeah. And then there are also reports of
management being unconservative with their pay. Yeah. No, there were
a lot of stories about top levels of management at
Thomas Cook. We're having some of the most exorbitant like
(28:42):
executive salaries and benefits. So there was a lot of
stories about essentially mismanagement, you know, staying that people were
overpaid for their positions. At least that was the perception.
I'm not sure if that was the reality. And these
these factors were compounded by the fact that by May
often hotel and gas costs were up and that was
(29:04):
making travel even more expensive, which was cutting into the
profit margin for these packages they were offering because they
couldn't have the packages go up too much or people
wouldn't buy them. But they couldn't have it hold at
the lower levels because then they would be losing money
on the deal. So it put them in a rough place. Yeah.
July nineteen, Thomas Cook Group received an initial offer from
(29:28):
folks In to be purchased yet again again, so that
was something that the company was considering. But by August
two thou nineteen, they entered into a rescue package which
would give folks in tourism control of the Thomas Cook
Group tours and vacations. It would give Thomas Cook Airlines
(29:49):
to creditors and bond holders. And this package was nine
million pounds. So this look like this might be able
to keep the company going for that just under or
a billion pounds amount. But it wasn't no, because another
punch was right around the corner. Yeah, just a month later,
creditors are demanding an additional two hundred million pounds in funding. Uh. Yeah,
(30:14):
they were worried that two thousand nineteen that the winter
of two thousand slash two thousand twenty was going to
be a repeat of two thousand eighteen, which you know,
we live in the south and it's been a very
hot September seven degrees in October four when we record this,
so not completely unfounded. Yeah, but that meant that the
(30:35):
additional two million was beyond what Folson was willing to
to negotiate, and the deal essentially fell through. And it
by falling through, the company crumbled. Yes, they went into
immediate liquidation. This one hundred and seventy eight year old
company closed its doors overnight. And the big part of
(30:57):
the problem that you've probably heard about if you've been
paying it to to the news regarding Thomas Cook, is
that more than half a million people were on a
Thomas Cook vacation while this happened. And you're talking about
immediately ceasing operations, which means that airline doesn't exist anymore,
(31:17):
which meant thousands of people no longer had a way home. Yeah,
you had folks who were trapped all over the place.
And this is when the UK government had to look
into how to fix this for at least the UK citizens. Now,
keep in mind, there was like six thousand people who
are on vacation, only about I say only still a
(31:39):
huge number of people, about a hundred sixty thousand of
those were British citizens and everybody else was kind of
just plumb out a lot. Yeah, at least for this
particular solution, and that solution was that the United Kingdoms
Civil Aviation Authority would start a repatriation peacetime program called
Operation Matter horn Man. What I guess it takes some
(32:03):
of the sting out that you're gonna have to depend
upon your home country's government to get you back home
if you're told that it's part of Operation matterhorn a
fun Disney ride. I mean, at least it gives it
something like romantic as opposed to get me the hell home.
It does give you something pleasant sounding to tell your grandchildren. Yeah,
(32:25):
and um, it was funny because I was actually reading
news articles written about this whole experience. And for some people,
I mean, it was very it was it was frustrating, stressful,
it was confusing, and you know, perplexing. But for some
people they got an unexpected, crazy upgrade to their experience
(32:49):
because the C a A Was chartering flights from pretty
much any available airline that had aircraft, and some of
them were luxury airlines. Harter flights are nice, yeah, and
these were I mean these were like commercial jets. These
are like but in some cases there were commercial jets
that were meant for luxury flights where you might end
(33:10):
up in, you know, a luxury suite type situation that
normally would cost you thousands and thousands of dollars, but
because it was the government that was kind of coming
in and swooping it up, you didn't have any extra cost.
It was them trying to get you home. I would
hope that the people who found themselves in that situation
would be able to enjoy the unexpected benefit through all
(33:33):
the stress well, and a lot of them also expressed
a deep sense of empathy for the crew and the
staff of Thomas Cook there. Over and over, I read
reports about how they wanted to make it clear that
they were not blaming any of the people who worked
(33:53):
there for what was happening wasn't their fault, right, but
that it was. And there were a lot of also
reports that talked about how the flight cruise, the Thomas
Cook flight cruise new like as they were flying they
learned that their company no longer existed, and that but
when they landed they literally would have no job and
if they were landing in another country, no way home. Yeah, yeah,
(34:16):
like you can't just take you give me well, I
guess this plane's mind now. And flight attendants will sometimes
take other airlines, but it's rare, like super rare. Yeah. Now,
a lot of airlines did try and step in and
honor Thomas Cook tickets in an effort to try and
get people home because everyone recognized that this is an
extraordinary set of circumstances. I want to say that despite
(34:41):
how sad this story is, it's kind of nice to
see the community step in and try to be helpful
and really care about their fellow man. Yeah, and it's
still pretty I mean, it's such a huge endeavor. Like
the we're recording this. Like I said on October four,
the Operation matter Horn continues through October six, so it'll
be over by the time you listen to this, But
(35:03):
for us, it's still in the future. And the UK
government has predicted that, according to their estimations, about of
the passengers who had booked to return to the UK
by October six will have been flown back. So there
still will be some people who will not have been
flown back. And anyone who's travel plans went beyond the
(35:23):
sixth they're not covered by it either. Man, imagine if
you're having a red eye morning of the seventh flight.
I imagine that if you were traveling back like you
could cut your trip short right and you could end
up going back and getting on one of these government flights.
Another issue that people were having is that there were
a lot of hotels that weren't sure about how they
(35:46):
were going to get paid that again, they were to
be covered by the Thomas Cook uh Company and by
the UK. A lot of of travelers said that when
they were trying to lead their hotel, they were being
confronted by hotel staff being told they had to pay
their hotel stay. But as Thomas Cook customers, they had
(36:09):
already paid for their holiday, so essentially they were being
told that they were going to have to pay twice man.
So it was a huge mess. On top of that,
back in the UK and around the world, really twenty
one thousand employees were out of work because the company
they worked for no longer existed. Yeah, and all of
the companies that do still exist that worked with Thomas
(36:29):
Cook are worrying how they're going to make their money back.
I mean, this is causing a cascade of financial issues. Yes, Yeah,
Remember when we mentioned about how the company reached out
and had these relationships with different hotels, for example in Crete,
of the hotels in Crete were dependent on Thomas Cook
(36:52):
to book travel packages that would help fill up those hotels.
Now that doesn't mean that they won't find people without
Thomas Cook, but it means that a steady source of
revenue is now gone and they're going to have to
figure out how to manage without that that source. And
that's one example in one island. There are a lot
(37:14):
of communities throughout the Europe, in the Middle East in particular,
that are going to be struggling now without the Thomas
Cook Company being there. Yeah, it's crazy to me because
this is this is not something you ever think of happening,
and it's the second time it's happened this year where
a travel business has overnight shut its doors and left
(37:36):
tons of people stranded. Yeah, it's it's pretty terrifying now. Again,
like that's another indicator that the world has changed significantly,
that now we're in a world where a lot of
people are doing some of this stuff, much of this
stuff on their own. My wife and I we we
handle everything because well, my wife, did you travel so
(37:57):
much your pros? My wife works in the travel industry,
so it's almost like I'm married to someone who does
this anyway. Um, so that that's part of it. But yeah,
like there are certainly times where we've gone to other
countries where we have booked tours and stuff. We still
do it kind of piecemeal, like we're doing it tour
by tour, but we booked tours because it's a very
(38:19):
efficient way for us to go and see something that
we're not familiar with, and we don't have to worry
about how are we going to get there, how are
we going to get back, how are we going to
get food, how are we going to plan out our time?
All that's taken care of. You know, you can have
the flip side of that, where you're like, oh, well,
with that trade off comes the freedom to be able
(38:40):
to do what you want when you want, Like if
you find something you are particularly interested in, but the
tour means you have to keep on going. It means
that you've got to cut things short. That's frustrating. So
there's a trade off there. But yeah, I think you know,
it's not the travel agencies are over. There're still plenty
out there. There's still a lot of travel agents out there.
But I think it's increasingly difficult to to work as
(39:04):
a business with the Internet unless there are those of
us who have booked the travel ourselves and thought, I
just don't want to have to deal with that. I'm
gonna I'm gonna pay someone else to do. There's certainly
less need for them and therefore less market for as
many as there used to be. Yes, yeah, it's uh,
it's not the sort of thing that you expect to
see a brick and mortar travel agency anymore. Like in
(39:27):
the eighties you might go to a shopping center and
you'd see like a travel agency there. It's much more
rare to encounter that kind of thing just you know,
randomly out in the world these days. So, um, don't
just book it. It's so sad because I love that.
(39:48):
I love that motto. Yeah, yeah, it'll be I really
I'm really hopeful all those people affected, all the ones
who were affected by having their their holiday a impacted,
all those who had holiday plans that are now gone
because the company's gone, and all the people who worked
for that company. I really hope things work out well
(40:11):
for them. This was a dramatic fall from the Brink,
like about as dramatic as we've covered so far. I
would have to agree. Uh So, if you want more happy,
go lucky stories about thousands of people getting out of work, uh,
(40:31):
why not? Let us know what companies we should cover next, Ariel,
How do they reach out to us? You can email
us at feedback at the Brink Podcast dot show, Yes,
and visit our website At the Brink Podcast dot show.
You will find an archive of every single episode we
ever recorded. You also find information about your beloved hosts
(40:52):
and until next time. I have been Jonathan Strickland and
I have been aerial casting. Business on the Brink is
a production of I Heart Radio and How Stuff Works.
For more podcasts for My heart Radio, visit the I
heart Radio app, Apple Podcasts, or wherever you listen to
your favorite shows.
Welcome to Business on the Brink, a production from I
Heart Radio and How Stuff Works. I found out long
ago it's a long way down the Holiday Road, and
six hundred thousand people learned that same lesson when a
famous travel company suddenly went out of business. The collapse
required the British government to figure out how to get
(00:25):
more than one hundred thousand citizens back home. This is
Thomas Cook on Business on the Brink. Hi, everybody on
Jonathan Stricklin and I'm Ariel Casting, And this week we
(00:46):
aren't doing a listener suggestion. We're doing one that was
recently in the news when we were deciding to record this.
It's a monumental story, one that also I think a
lot of Americans, like you and I weren't. You know,
we probably weren't really that familiar with this company. I
certainly I was not either. This was actually this is
(01:08):
a company, Thomas Cook is a company that to any
listeners in the UK, you guys know all about this,
but we hadn't really heard about it. In fact, I
remember it was used as sort of a joke in
a couple of British series that I watched, and I
had no idea just went right over your head exactly.
And it was one of those those regionalized bits of
(01:30):
humor that did not translate to me even though they
were speaking English. And it's weird too because the Thomas
Cook Group, which is what the company was called once
they shut down, uh, the oldest long standing travel agency ever. Yeah,
more than a century old. And they did do excursions
all over the world. So they were just most popular
(01:53):
in UK, which is where they started. Yeah. And in fact,
their founder, by no surprise, was named Thomas Cook Group. No,
he was named Thomas Cook and the company was named
Thomas Cook at first. Yes, So Thomas Cook started off
not as someone who was planning out holidays for his
fellow British citizens to go trapesing about in Tunisia. That
(02:17):
was not the purpose. Uh, that's not how he got started.
He got started on a much more sober endeavor. Oh
I see you did there. That's very clever, Jonathan. Yes. Uh,
Thomas Cook was a huge fan of temperance. He did
not like alcohol and in fact, he wasn't even like
(02:38):
a jet setter. He was a cabinet maker and a
former Baptist preacher. Yes, And he started his career as
a travel agent by getting Temperance supporters around England by
train to their meetings. There were twelve mile trips, one
day excursions. Very small, yeah, but this was back in
eighteen forty one, and while the trips were small, the
(03:03):
number of people was pretty large. He was getting up
to people to go on some of these trips. And
what it really came down to is that you're talking
about a lot of people who had not had any
experience booking any sort of travel, So to them it
was extremely intimidating, and he, because of his passion for
the cause, was willing to take on the burden of
(03:23):
responsibility to do all that work of the actual booking
of tickets. So he handled all of that on behalf
of the people, and that way he could ensure that
he would get a passionate crowd to show up to
these temperance gatherings and they wouldn't you know, the the
the barrier of getting on a train and figure out
(03:44):
where you're going and everything that was lifted off of
them so they were more likely to participate. He he
took that passion for getting these these people to these
good causes, what he considered good causes at least I'm
not gonna say it's not a good cause. All I'm
saying is that there's one drinker in this podcast, and
it's not me. Look, just because you're allergic and and
(04:09):
and by drinker, I mean Ariel occasionally as a drink,
and then Jonathan laughs at me. He expanded his trips
to Sunday schools. So now he was organizing trips for
people to get to temperance meetings and Sunday school where
those kids were getting lit off the sacramental line. No no,
so he Yeah, this is obviously very modest, But what
(04:32):
happened was that he began to learn that he was
really good at this. He was good at organizing all
these details. He was good at handling this and keeping
stuff on track for other people, and he was starting
to see the promise of this being a let's say,
more viable career than making cabinets. Yep. So he he
(04:54):
ran his very first commercial trip in all the way
to the far off land of Liverpool. Yeah, he was
one years too early for the Beatles, so everyone was
very disappointed. I know, I asked for a refund. So
by eighteen forty six he began offering tour trips to
Scotland and made a lot of money by not taking
anyone back out n till they paid twice as much.
(05:16):
It seems smart to me. No, I'm just that's me
being totally snouted. It still sounds smart to me. He
He also that these were trips where people were taking
train and steamboat trips, so again like he's coordinating multiple
legs of a trip, something that a lot of people
would have found intimidating or maybe even impossible to arrange.
(05:38):
You know, you might not even know where to turn
back in the mid nineteenth century without the internet. Yeah,
there's no internet, you know. In fact, trains and steamboats
are pretty darn neew themselves. And on top of that,
he began to produce guide books so that people would
know more about the location they were going to visit,
(06:00):
and he would answer very important questions such as is
it safe for ladies to travel to the Highlands. That
is not a joke. That really was one of the chapters.
It is important to know I have seen Outlander. Well,
he moved from transportation for these trips to actual tours,
so kind of yes, ending the guide books, Yes, yeah,
(06:23):
this would be eight So now you could book an
entire inclusive tour. And again, like he was seeing the
things that people really liked about this sort of this
proto travel agency that had grown kind of organically. They
liked the fact that they could go to places and
have these experiences, and they liked being able to put
(06:46):
more of the planning side on somebody else so they
could just enjoy their trip. It's a holiday, you wanted
to be relaxing. Well, his first year Pean tour started
in England and ended at the International Exhibition in Paris.
End to facilitate multi country travel, he started offering foreign
exchange services. Yeah, so pretty pretty forward thinking at this point.
(07:10):
And then he began to offer holiday packages, which is
kind of what we would think of for your typical
travel agent these days. Like that's the kind of thing
where you know, it's the transportation, hotel and meals exactly
and uh and so again taking all that burden off
the individuals so they can just enjoy their trip. In
(07:30):
eighteen sixty five, he opened a store in Fleet Street, London,
just down the down the way from a charming barbershop.
Don't try the pies. Uh, And he had his son
John start working with him. Yes, and uh, they also
would sell travel accessories. They also would offer coupons with
(07:53):
with hotels that they had partnered with, so that that
way they could direct business to specific facilities for a
discounted price, and those hotels would do things like offer
free meals and such. Yeah. So this was one of
those deals where because of he was working in such
volume he could help out hotels in distant places, they
(08:17):
could help him out by cutting him a deal. Uh,
this would turn out like we're still talking about the
early early days of this company. But when you sit
there and think about this, these relationships between a travel
agency and these other parties like hotels, you start to
see where the potential impact is going to be when
we get to the sad part of the story where
(08:38):
the company is unraveling. Yeah, but we're not there yet. No,
we cut a couple of centuries to go, so a
century a century. In eighteen sixty six, they started offering
tours to the US. Yeah, I started having to provide
English to American interpreters so that people can understand each other.
Very important living in the South, where they say the
(08:58):
Southern accent is close to an old English accent, which
probably was not that old anymore. Uh, well, at that
point it was a newer English accent. You needed people
interpreters in the South because we can't hear as fast
as other people talk. It's true, it's true, we can't
think as fast as other people talked to In eighteen
seventy one, they partnered with an American What do you
mean we can't think as fast as the other people talk.
(09:22):
Point case. In eighteen seventy one they partnered with an
American businessman to help with their US tours, but it
was not a good partnership and it eventually ended. Yes,
I just wanted to put that out there. Uh, it
is a jump ahead. Yeah. Also in eighteen seventy three
they had a London to London tour, which sounds like
it would be super short, but instead it was London
(09:44):
to London via the rest of the world. Was it
in a hot air balloon like around the world in
eighty days? It was not. It cost two hundred guineas pigs. No,
not like a guinea was one pound one shilling. Because
the English have determined that the monetary transaction should be
(10:05):
as confusing as it possibly can be. By this time,
Thomas's son John was a partner. They changed the name
of the company to Thomas Cook and Son, and John
was focusing a lot on the commercial end, because Thomas
was really good at organizing all this, but not so
much advertising. Yeah, and uh, John was getting more and
(10:26):
more frustrated about that, so that by essentially said you
know what, Dad, you really you've earned yourself arrest. Go
have a stiff drink. Oh oh, I almost forgot about
the temperance stuff. Yeah. He never stopped with that opinion.
So John ended up taking over the business. Thomas stepped down,
(10:47):
and John had sons of his own who also joined
the family business, three of them, and they were really
good at running it. Uh. Under John and his sons,
they started delving into military transport, postal transport, and tours
to the Middle East. Within ten years they had locations
all around the world and a couple of years after
that they had sold over three million tickets. Wow, so
(11:12):
getting towards the end of the nineteenth century. In eighteen
nineties six, they then also got a great privilege, a
great honor. They were named the official travel agent for
the Olympics in Athens, which would be the first modern
version of the Olympics. That's a pretty big milestone. I
think it's a great thing to have put on your brochures.
(11:33):
I agree. In nineteen they started delving inte luxuries such
as recreational air travel, and things were going really well.
And that's the end of the story. I don't we
got we got a lot of sad stuff to go through.
But it's actually a very complicated story. So before we
get into that, I recommend we take a little break good.
(11:55):
I need a stiff drink, so we're back Ariels a
little tipsy. But we're now going to continue with the
story of Thomas Cook. By the time we get into
the nineteen twenties, uh, the grandsons of Thomas Cook, John's
(12:16):
three sons. Yes, at that time, I think they in turn,
we're ready to retire, right, so the family business was
about to no longer be a family business. That is correct.
They sold Thomas Cook, Oh goodness, to the Compania International
de grand espress Europeans. That was horrible. It was a
(12:41):
good attempt at our French accent. I haven't done French
since seventh grade. Yeah no, Well, there's that whole Renaissance
festival time where you played a French person accent and
actual communication are different things. So yes, so this French
company comes in and c i w L and they
(13:02):
purchase the Thomas Cook Company. Some people say that the
reason why this happened was that the Cook's grandsons were
concerned with the financial health long term health of the
Thomas Cook Company, and that they wanted to get out
while the getting was good. Uh. C i w L
had another high profile company under like a name and
(13:27):
travel that is infamous, right, that would be the Orient Express.
I would say it's almost more infamous in literature, yes,
because murder on the Orient Express obviously, but yes, as
the Orient Express us the same company that owns the
Orient Express But the c i w L would not
hold on to Thomas Cook for very long, not as
(13:52):
long as the family owned it. No, within less than
in less than twenty years, Germany occupied Belgium, Yes, which
is where the headquarters for c i w L were.
And and that was because World War two is happening,
and the British government stepped in and nationalized Thomas Cook,
(14:13):
folding it into British Railways. Yeah, and this is not
that different from what the United States did in the
outbreak of World War one when they essentially appropriate all
the radio stations, which is how we got our c
A right, So, which is again you you can kind
of understand it from a national security standpoint, right, you
cannot have a major transportation company being operated by a
(14:39):
foreign power during a time of war. It just doesn't
it doesn't make sense from a national security standpoint. So
that is why the UK government nationalized Thomas Cook. Well,
and after that because after war people want to save money.
You know, they started losing income, they started losing revenues
because people in more economical travel packages and Thomas Cook
(15:03):
did sort of focus on the middle class and providing
reasonably priced Yeah, but they were having a hard time
keeping up with this this cheaper demand. And on top
of that, you know their government run governments are slow
to make change. Yeah, governments don't have to respond to
(15:23):
the market the same way that a private company would.
And so there were some really some big issues with
how the government was running this. Um. You know, their
goal was not two They had different priorities than a
private company would. So it's not that it was necessarily worse,
(15:44):
it was just different and not necessarily what customers were
wanting exactly. So that problem got solved when a bank,
a hotel, restaurant group, and an auto group walk into
a bar. Yeah why the long face. Yeah, they they
banded together and they decided that they would purchase essentially
(16:05):
that Thomas Cook from the British government, making it a
private company. Again. That was in the nineteen seventies, and
this was again where the company was mainly focused on
these all inclusive packages. Right, you you buy the whole
holiday from Thomas Cook and you don't have to worry
about anything. And because you had the auto company, you
(16:25):
had the hotel and restaurant company, you had a bank
in there, they were able to meet a lot of
those with their own resources, and whatever they didn't have,
they could end up partnering with other companies. It just
makes everything more streamlined. In the eighties, Thomas Cook had
a pretty big presence in the US due to travelers checks,
(16:46):
because they were actually one of the they were one
of the first companies to ever operate travelers checks, or
or a precursor to them. Yeah, they were so big
that they even opened a computer center in the United States,
United States, and yet I still had heard of that.
I was about to say, by the early nine nineties,
they were one of the world's leading for and exchange retailers.
(17:07):
They had acquired a company called Deek International, which got
them to that point, and then they were acquired by
a different combo group of businesses, so the the hotel,
restaurant group, the bank and the auto company sold it
to a different bank and travel conglomerate company this time
group of companies, this time to West Dutch Land Space.
(17:30):
That's Deutsche LANs Bunk. Listen, why don't you let me
say it if you could say it better West LB
and the LTU group, which was an airline like it's
Dutch instead of Deutsche. Uh. They then acquired a bank subsidiary,
enter Payment Services Limited in nine and that made them
(17:50):
the largest supplier of travelers checks outside the United States.
And then they sold their travel management business to m X,
which gave a mex about tempers of Thomas Cook's annual revenue.
They really, uh, we're deciding they needed to start folk streamlining. Yeah,
and when we've seen this many times where a company,
(18:11):
you know, it diversifies to the point where it realizes, no,
now we need to cut back on some areas because
we've lost so much focus that we're not able to
function properly. Well, this is just the tip of their
going back to a single focus. Oh yeah, no, we're
gonna it gets a lot worse before it could. Well,
it doesn't get better, but spoiler alert, it does not
(18:32):
get better. It just keeps getting worse. Well, it gets
slightly better for a little bit. Because LTU, the airline
that was in partnership with west lb in owning Thomas
Cooke about out and so West Alby bought a whole
bunch of different travel operations, airlines and tour groups and
things like that and rolled them all into the company
under the brand JMC for John Mason Cook, Thomas Cook's son,
(18:56):
and then took those properties and made their own airline. Yeah. Uh,
this would also end up being a big part of
the problem in a few years. It certainly would. So uh.
They also ended up launching a website in n and
we're one of the first companies, in fact, the first
(19:17):
travel agency in the UK to offer travel packages that
you could purchase online. So that a lot of these companies,
when we talk about them, that this is the sort
of thing that we tend to to point out and
say moment right that they failed to adapt to changing times,
at least as far as web access. The web, the
(19:39):
ability to purchase things on Thomas Cook was on the
front line. Yeah, but other elements of that changing landscape
would be things they could not compete with. Exactly. Once
we reached the two thousands, Thomas Cook decided to pare
down their focus to just travel. So they sold their
financial division service and they sold their foreign exchange service
to Travel X, and so then travel X also would
(20:03):
be able to use the Thomas Cook branding on their
checks for five years as part of this deal. So
it was smart, yeah, kind of trading on that name also,
just to make that transition a little less rocky for
anyone who was actually using those things, So that that
helped a bit. That same year they finalized the sales
(20:24):
of the divisions, they also got acquired again again by
Condor and Necroment Touristic a G in Germany. Why did
you give the easy one? To say, because I saw
it ahead of time and I jumped on it. So
they became Thomas Cook a G at this point. And
to me, it's amazing how many times this company had
(20:45):
been through these different mergers and acquisitions. They're not done yet.
But before we get to their next acquisition, they launched
the airline in two thousand three officially, yes, Thomas Cook Airlines.
And then we get back into the mergers, acquisitions and
names ages. This one actually is possibly the most important
one of all of Thomas Cook's history. Uh. In two
(21:08):
thousand seven, they merged with another company they might Travel
Group PLC. And this time the company would be known
as Thomas Cook Group p l c. The name that
they ended with, and this was it was meant to
expand the reach of Thomas Cook to new regions that
otherwise they had not had a lot of presence in,
(21:29):
like Scandinavian countries, and they were doing it in an
effort to also kind of consolidate things and ultimately save
some money. Yeah, they're hoping these moves would save them
about seventy five million pounds a year. Yeah. And then
they also merged operations with an organization called Cooperative Group
(21:49):
and the Midlands Cooperative Society. And by combining all these
they became the largest travel agency exactly, the largest chain
of travel agencies in the United Kingdom. They had more
than twelve hundred physical shops, most of them located in
what the Brits called the high streets. High streets are
(22:11):
like the shopping districts. But here's the problem. We've seen
over and over again how mergers and acquisitions often the
process is an incredibly expensive one, and often you're also
looking at combining the debt of two, sometimes very large organizations,
(22:32):
which means you've got even more debt to deal with.
That was the case with this merger. Well, and then
on top of it, you've got the travel industry changing
to more online and they've got all of these shops. Yeah,
so you've got overhead, You've got a billion dollars in
debt by about that's about twice as much as what
(22:54):
Thomas Cook had in two thousand seven. Before, just as
this merger was taking place, you had the fact that
online it wasn't just that you could book things online.
A lot of the grunt work that travel agents would
do had become much easier to do yourself online. And
that's true. So yeah, so, like the reason why the
(23:17):
average person would go to a travel agent was largely
because I find this process intimidating. I want to hand
it off to someone who knows what they're looking for.
They already know the the reputable places, but with the
Internet suddenly doing that research became much easier, and in fact,
for a certain type of person, it's fun. I sometimes
(23:40):
enjoy it. Lately, from my last couple of trips, I've
used a travel agent because it's it's I mean, they
don't cost me anything. Usually they get paid through their
partnerships at hotels and things like that, and so I
find it much more relaxing to say, here's what I want,
find me something within my budget. Yeah, I would have
(24:01):
never stated that amazing Murder Hotel if I had done that.
You're gonna have to tell me more about that. Let's
take a quick break, all right, we're we're now that
I've caught Aerial up on Murder Hotel, I'm never going
to sleep again. Yeah, she's been hitting the drink twice
(24:23):
as hard. Now we're gonna finish up and talk about
the precipitous drop off the brink that Thomas Cook went through.
And it was this was something that happened so suddenly
that it took a lot of people by complete surprise.
Even even people who had said, yeah, I knew that
they weren't doing well financially, were shocked at how fast
(24:45):
this unraveled? Well, you never think that somebody's just going
to close overnight when they've got tons of people all
around the globe. So how we got there? In two
thousand seven, Like we said before the break, they had
more brick and mortar location than any other travel retailer, right,
but the travel industry as a whole was shifting online
(25:06):
so quickly that that was not an asset. It was
actually a liability, yes, because it was all that overhead,
so much overhead, unlike an airplane with very little overheads,
it's all it's all underfoot. In two thousand eleven, the
company sought out one d and twenty five million dollars
dollars of pounds I believe dollars. Yeah, every report I
(25:28):
saw was posted in a American news journal, so I
just assumed that that means we're talking dollars, but million.
Whether it's dollars or pounds, there's a lot of money,
a lot of money. And they did this too, tied
over their cash shortage. Yes, so this was like a
(25:48):
they were in a real serious cash crunch that they
just didn't have the money to keep operations going. On
to billion dollars in debt. Yeah, so this this was
essentially to keep the lights on and to be able
to pay their their staff. You know, keep in mind
their staff. It's not just travel agents. We're talking about
flight crews, We're talking about you know, paying for the
fuel for your your aircraft. There's tons of things that
(26:11):
are part of this gargantuan business at this point. Yeah,
it's it's mind boggling. Yeah. The next year, the company
announced it was going to restructure and in the process
closed two hundred of its stores, and in the company
announced that it was going to streamline by merging their
airlines in Belgium, Scandinavia, the United Kingdom and Germany into
(26:32):
a single division, and in they announced a strategic partnership
with a Chinese investment group called Folson International, which looked
like it might have been a saving grace. Looked like
it looked like it. It wasn't. The first half have
two eighteen, the company was seeing a huge drop off
(26:53):
in customers. Yes, and the reasons for this are are multiple, Like,
there's no one cause we can point to and say
this is why people traveled less. There actually quite a
few different reasons that contributed in some way, shape or form.
For example, you've probably heard if you if you're not
(27:14):
in the UK, you've definitely heard about it. If you're
in the UK, you're living it. The Brexit process right.
So Brexit, some people have argued, has discouraged a lot
of travel, so a lot of people not knowing what
was going to be in store for them, you know,
financially or legally, just to move in and out of
(27:37):
countries in the EU, for example, they held off on
holiday plans. So that was one argument. Another was that
in the UK had an unusually warm winter, and in
the UK winter is when a lot of Brits fly
away to get to someplace that ain't so gosh durned
(27:58):
dang cold and gray. Yeah, I'm one of the coldest
winters I ever spent. Was a June in the UK. Yeah,
that's how cold it can get there. Yeah. Now I
was in Scotland, the northern regions of Scotland and it
got chilly at night. No, but but yeah, it's it's
I mean I always think about when I go to Orlando, Like,
if I go to Orlando in the summer summer months,
(28:21):
I see one type of uh tourists all over the place.
But if I go in the winter months, it's almost
all Brits. Yeah. And then there are also reports of
management being unconservative with their pay. Yeah. No, there were
a lot of stories about top levels of management at
Thomas Cook. We're having some of the most exorbitant like
(28:42):
executive salaries and benefits. So there was a lot of
stories about essentially mismanagement, you know, staying that people were
overpaid for their positions. At least that was the perception.
I'm not sure if that was the reality. And these
these factors were compounded by the fact that by May
often hotel and gas costs were up and that was
(29:04):
making travel even more expensive, which was cutting into the
profit margin for these packages they were offering because they
couldn't have the packages go up too much or people
wouldn't buy them. But they couldn't have it hold at
the lower levels because then they would be losing money
on the deal. So it put them in a rough place. Yeah.
July nineteen, Thomas Cook Group received an initial offer from
(29:28):
folks In to be purchased yet again again, so that
was something that the company was considering. But by August
two thou nineteen, they entered into a rescue package which
would give folks in tourism control of the Thomas Cook
Group tours and vacations. It would give Thomas Cook Airlines
(29:49):
to creditors and bond holders. And this package was nine
million pounds. So this look like this might be able
to keep the company going for that just under or
a billion pounds amount. But it wasn't no, because another
punch was right around the corner. Yeah, just a month later,
creditors are demanding an additional two hundred million pounds in funding. Uh. Yeah,
(30:14):
they were worried that two thousand nineteen that the winter
of two thousand slash two thousand twenty was going to
be a repeat of two thousand eighteen, which you know,
we live in the south and it's been a very
hot September seven degrees in October four when we record this,
so not completely unfounded. Yeah, but that meant that the
(30:35):
additional two million was beyond what Folson was willing to
to negotiate, and the deal essentially fell through. And it
by falling through, the company crumbled. Yes, they went into
immediate liquidation. This one hundred and seventy eight year old
company closed its doors overnight. And the big part of
(30:57):
the problem that you've probably heard about if you've been
paying it to to the news regarding Thomas Cook, is
that more than half a million people were on a
Thomas Cook vacation while this happened. And you're talking about
immediately ceasing operations, which means that airline doesn't exist anymore,
(31:17):
which meant thousands of people no longer had a way home. Yeah,
you had folks who were trapped all over the place.
And this is when the UK government had to look
into how to fix this for at least the UK citizens. Now,
keep in mind, there was like six thousand people who
are on vacation, only about I say only still a
(31:39):
huge number of people, about a hundred sixty thousand of
those were British citizens and everybody else was kind of
just plumb out a lot. Yeah, at least for this
particular solution, and that solution was that the United Kingdoms
Civil Aviation Authority would start a repatriation peacetime program called
Operation Matter horn Man. What I guess it takes some
(32:03):
of the sting out that you're gonna have to depend
upon your home country's government to get you back home
if you're told that it's part of Operation matterhorn a
fun Disney ride. I mean, at least it gives it
something like romantic as opposed to get me the hell home.
It does give you something pleasant sounding to tell your grandchildren. Yeah,
(32:25):
and um, it was funny because I was actually reading
news articles written about this whole experience. And for some people,
I mean, it was very it was it was frustrating, stressful,
it was confusing, and you know, perplexing. But for some
people they got an unexpected, crazy upgrade to their experience
(32:49):
because the C a A Was chartering flights from pretty
much any available airline that had aircraft, and some of
them were luxury airlines. Harter flights are nice, yeah, and
these were I mean these were like commercial jets. These
are like but in some cases there were commercial jets
that were meant for luxury flights where you might end
(33:10):
up in, you know, a luxury suite type situation that
normally would cost you thousands and thousands of dollars, but
because it was the government that was kind of coming
in and swooping it up, you didn't have any extra cost.
It was them trying to get you home. I would
hope that the people who found themselves in that situation
would be able to enjoy the unexpected benefit through all
(33:33):
the stress well, and a lot of them also expressed
a deep sense of empathy for the crew and the
staff of Thomas Cook there. Over and over, I read
reports about how they wanted to make it clear that
they were not blaming any of the people who worked
(33:53):
there for what was happening wasn't their fault, right, but
that it was. And there were a lot of also
reports that talked about how the flight cruise, the Thomas
Cook flight cruise new like as they were flying they
learned that their company no longer existed, and that but
when they landed they literally would have no job and
if they were landing in another country, no way home. Yeah, yeah,
(34:16):
like you can't just take you give me well, I
guess this plane's mind now. And flight attendants will sometimes
take other airlines, but it's rare, like super rare. Yeah. Now,
a lot of airlines did try and step in and
honor Thomas Cook tickets in an effort to try and
get people home because everyone recognized that this is an
extraordinary set of circumstances. I want to say that despite
(34:41):
how sad this story is, it's kind of nice to
see the community step in and try to be helpful
and really care about their fellow man. Yeah, and it's
still pretty I mean, it's such a huge endeavor. Like
the we're recording this. Like I said on October four,
the Operation matter Horn continues through October six, so it'll
be over by the time you listen to this, But
(35:03):
for us, it's still in the future. And the UK
government has predicted that, according to their estimations, about of
the passengers who had booked to return to the UK
by October six will have been flown back. So there
still will be some people who will not have been
flown back. And anyone who's travel plans went beyond the
(35:23):
sixth they're not covered by it either. Man, imagine if
you're having a red eye morning of the seventh flight.
I imagine that if you were traveling back like you
could cut your trip short right and you could end
up going back and getting on one of these government flights.
Another issue that people were having is that there were
a lot of hotels that weren't sure about how they
(35:46):
were going to get paid that again, they were to
be covered by the Thomas Cook uh Company and by
the UK. A lot of of travelers said that when
they were trying to lead their hotel, they were being
confronted by hotel staff being told they had to pay
their hotel stay. But as Thomas Cook customers, they had
(36:09):
already paid for their holiday, so essentially they were being
told that they were going to have to pay twice man.
So it was a huge mess. On top of that,
back in the UK and around the world, really twenty
one thousand employees were out of work because the company
they worked for no longer existed. Yeah, and all of
the companies that do still exist that worked with Thomas
(36:29):
Cook are worrying how they're going to make their money back.
I mean, this is causing a cascade of financial issues. Yes, Yeah,
Remember when we mentioned about how the company reached out
and had these relationships with different hotels, for example in Crete,
of the hotels in Crete were dependent on Thomas Cook
(36:52):
to book travel packages that would help fill up those hotels.
Now that doesn't mean that they won't find people without
Thomas Cook, but it means that a steady source of
revenue is now gone and they're going to have to
figure out how to manage without that that source. And
that's one example in one island. There are a lot
(37:14):
of communities throughout the Europe, in the Middle East in particular,
that are going to be struggling now without the Thomas
Cook Company being there. Yeah, it's crazy to me because
this is this is not something you ever think of happening,
and it's the second time it's happened this year where
a travel business has overnight shut its doors and left
(37:36):
tons of people stranded. Yeah, it's it's pretty terrifying now. Again,
like that's another indicator that the world has changed significantly,
that now we're in a world where a lot of
people are doing some of this stuff, much of this
stuff on their own. My wife and I we we
handle everything because well, my wife, did you travel so
(37:57):
much your pros? My wife works in the travel industry,
so it's almost like I'm married to someone who does
this anyway. Um, so that that's part of it. But yeah,
like there are certainly times where we've gone to other
countries where we have booked tours and stuff. We still
do it kind of piecemeal, like we're doing it tour
by tour, but we booked tours because it's a very
(38:19):
efficient way for us to go and see something that
we're not familiar with, and we don't have to worry
about how are we going to get there, how are
we going to get back, how are we going to
get food, how are we going to plan out our time?
All that's taken care of. You know, you can have
the flip side of that, where you're like, oh, well,
with that trade off comes the freedom to be able
(38:40):
to do what you want when you want, Like if
you find something you are particularly interested in, but the
tour means you have to keep on going. It means
that you've got to cut things short. That's frustrating. So
there's a trade off there. But yeah, I think you know,
it's not the travel agencies are over. There're still plenty
out there. There's still a lot of travel agents out there.
But I think it's increasingly difficult to to work as
(39:04):
a business with the Internet unless there are those of
us who have booked the travel ourselves and thought, I
just don't want to have to deal with that. I'm
gonna I'm gonna pay someone else to do. There's certainly
less need for them and therefore less market for as
many as there used to be. Yes, yeah, it's uh,
it's not the sort of thing that you expect to
see a brick and mortar travel agency anymore. Like in
(39:27):
the eighties you might go to a shopping center and
you'd see like a travel agency there. It's much more
rare to encounter that kind of thing just you know,
randomly out in the world these days. So, um, don't
just book it. It's so sad because I love that.
(39:48):
I love that motto. Yeah, yeah, it'll be I really
I'm really hopeful all those people affected, all the ones
who were affected by having their their holiday a impacted,
all those who had holiday plans that are now gone
because the company's gone, and all the people who worked
for that company. I really hope things work out well
(40:11):
for them. This was a dramatic fall from the Brink,
like about as dramatic as we've covered so far. I
would have to agree. Uh So, if you want more happy,
go lucky stories about thousands of people getting out of work, uh,
(40:31):
why not? Let us know what companies we should cover next, Ariel,
How do they reach out to us? You can email
us at feedback at the Brink Podcast dot show, Yes,
and visit our website At the Brink Podcast dot show.
You will find an archive of every single episode we
ever recorded. You also find information about your beloved hosts
(40:52):
and until next time. I have been Jonathan Strickland and
I have been aerial casting. Business on the Brink is
a production of I Heart Radio and How Stuff Works.
For more podcasts for My heart Radio, visit the I
heart Radio app, Apple Podcasts, or wherever you listen to
your favorite shows.
Business on the Brink News
Hosts And Creators
Jonathan Strickland
Ariel Kristen Kasten
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