UK travel giant Thomas Cook collapsed

Thomas Cook UK, the world’s oldest travel firm, announced bankruptcy, putting millions of travel plans at risk. After 178 years, UK travel company Thomas Cook this week announced its bankruptcy and liquidation.

A huge number of travelers, mostly from the United Kingdom, were stranded in various parts of the world, as the eponymous airline run by the company halted its operations. The airline had 34 aircraft operating chartered and scheduled flights to 82 destinations across UK and rest of the world. To bring stranded tourists home, the UK government roped in private carriers. And so, airlines like Virgin and EasyJet were asked to redeploy some of their aircraft to bring people back.

Thomas Cook’s 178-year operations came to a standstill after it struggled to find further private investment. The company was driven towards a $2.1 billion debt pile. It narrowly avoided collapse in 2011. With the business draining cash, lenders or bondholders and even the government were no longer willing to step in.

The company collapsed leaving hundreds of thousands of people stranded at holiday destinations around the world and the British government leading the biggest peacetime repatriation in British history.

The pressure on the balance sheet stemmed from the 2007 merger of Thomas Cook, which was German owned at the time, with Airtours-brand owner MyTravel, creating a 2.8 billion-pound group. Both companies had survived an industry downturn a few years earlier by slashing jobs. In May of this year the company wrote off the value of the MyTravel deal, some 12 years after the tie-up.

The company’s stakeholders pulled their support alarmed by the rate at which the business was burning through cash. The company consequently even asked credit card companies to release 50 million pounds held as collateral against its bookings.