Thomas Cook: Travel giant was in trouble for some time, says Sunderland University expert
The writing was on the wall for holiday giant Thomas Cook, says a Sunderland University business expert.
The firm collapsed early today, Monday, September 23, after efforts to put together a bail-out package failed.
The Civil Aviation Authority is co-ordinating efforts to fly more than 150,000 tourists home and the administration puts 22,000 jobs at risk worldwide, including 9,000 in the UK.
Professor Lawrence Bellamy, Academic Dean, Faculty of Business, Law and Tourism, said problems with the company had been evident for some time.
“After raising revenue levels from 2016 to 2017 - but realising marginal profits - Thomas Cook cited the exceptional summer as a reason for poorer sales and resulting losses in their 2018 annual report.
“For such a longstanding giant of the industry, the capability to absorb the issue, restructure to take out cost and ensure that the company was more robust going forward, should have been given.
“However, further issues arose including the weaker pound hitting procurement, consumer confidence, a flat package holiday market, increasing aircraft operating costs and different business competition models.
These all tested the resilience of an organisation which, due to timings of payment and scale of operations had a built in cash-flow advantage and procurement power.
“When times become challenging the ability to change greatly increases the chances of survival and dealing with the overhead of aircraft fleet, sales outlets and hotels, saw the company with a large asset base and all the costs which come with that.
“Given the high revenue and operations of the group it is likely elements of the company will be acquired and operated by others in the future, for a reduced cost.
“In the meantime the workforce stretching over more the 20 countries and totalling over 20,000 employees is left without income and thousands of holiday makers with Atol, their insurance or credit card company to get them home and recoup their losses.
“This is far more substantial than just the loss of a trusted brand.”