U.K. travel group Thomas Cook (TCKGY) collapsed into bankruptcy Monday, leaving hundreds of thousands of holiday markers stranded around the world after the 180-year old firm failed to secure rescue funding from its creditors.
Thomas Cook, which had hoped to receive a £900 million capital injection from China's Fosun Tourism Group earlier this year, failed to convince banks that its business model was sound enough to support its more than $2 billion in debts, particularly given the slowdown in travel and tourism linked to weakening regional economies and military tensions in the Gulf region.
However, as weekend talks collapsed, the venerable travel firm said it was left with no option but to file for liquidation, leaving n estimated 500,000 travelers stranded in airports and hotels around the globe.
"Although a deal had been largely agreed, an additional facility requested in the last few days of negotiations presented a challenge that ultimately proved insurmountable," Thomas Cook CEO Peter Fankhauser said in a statement. "I would like to apologize to our millions of customers, and thousands of employees, suppliers and partners who have supported us for many years. It is a matter of profound regret to me and the rest of the board that we were not successful."
Thomas Cook shares were suspended from trading on the London Stock Exchange Monday, but rival travel and tour operator TUI AG (TUIFY) surged 5.8% in Frankfurt while airlines such as Lufthansa AG (DLAKY) (+0.75%), Easyjet (ESYJY) (+3%) and Ryanair (RYAAY) - Get Report (+2.5%) bounced higher in early European trading as investors factored-in the removal of Thomas Cook's fleet capacity from European markets.
The fate of 150,000 Britons left in overseas hotels was a more immediate concern for the U.K. government, however, as Prime Minister Boris Johnson promised to both compensate hoteliers and organize a fleet of planes under Civil Aviation Authority to repatriate them.
"It is a very difficult situation and obviously our thoughts are very much with the customers of Thomas Cook, the holiday makers who may now face difficulties getting home we will do our level best to get them home," Johnson said.