Tuesday, September 24, 2019, 15:30/3:30pm
Your colleagues from GIA have been collecting information concerning the aftermath of the announced bankruptcy of Thomas Cook in the UK on Sunday evening. This is only Day #2 in the developments. Things change/information is made public multiple times every day concerning the status of the numerous TC subsidiaries throughout Europe. We at GIA will keep our clients and colleagues aware of the ongoing developments on a regular basis.
- Thomas Cook Belgium declared bankruptcy today, September 24, 2019
- Thomas Cook Netherlands declared bankruptcy today, September 24, 2019
- Thomas Cook “Scandinavia” Airlines has flights scheduled for September 24, 2019.
- Thomas Cook Germany has not declared bankruptcy as of September 24, 2019. The brand affecting North America is Neckermann. The other major TC Brands in Germany are Öger Tours, Bucher Reisen, Air Marin and Thomas Cook Signature. These brands are also sold in Austria and Switzerland.Thomas Cook Germany is currently negotiating with state and federal authorities, as well as with potential creditors, in order to avoid filing bankruptcy.
- All German vacations booked on TC Brands through September 26 have been officially cancelled. No bookings are currently possible. Travelers have been informed not to cancel any planned vacations after these dates as they would lose eligibility to receive full indemnity for their vacations.Travelers who booked a TC package tour (flight, hotel, transfer as one package) have a tour operator certificate of insurance in order to receive indemnity should the tour operator file bankruptcy. These certificates go back to a EU Directive from 1990 concerning Package Tours. It was determined that tour operators are covered up to EUR 110 million in the face of bankruptcy. The question is: does this mean Thomas Cook Germany as a whole OR this full amount for each of its subsidiaries? The amount would not be enough by far to cover the entire TC Germany group.
- Condor Airlines was supposed to have been sold off earlier this year, but negotiations were never really initiated. Condor Airlines is still flying. They have requested a EUR 200 million provisional bridging loan from the German Federal Government to continue service. Many German tour operators are dependent on Condor for flying German clients to destinations in the US, the Mediterranean, in the Indian Ocean and in the Caribbean. The government has not yet made a decision whether they will grant this bridging loan.
In the past two years Air Berlin and Germania both filed bankruptcy. There is no other airline competitor to the Lufthansa Group (LH, Swiss, Austrian, Eurowings, Brussels Air) aside from Condor in the German market. The German Federal Government gave Air Berlin a provisional bridging loan when its investor Etihad Airlines did not honor its investment commitment and Air Berlin had to file bankruptcy. During the course of bankruptcy proceedings, Air Berlin has paid back its loan in full.
Condor is considered a profitable airline. It flew 7 million passengers last year and has a fleet of 45 machines, albeit many of these planes are older and more costly to run (maintenance and fuel consumption). There were no serious takers for Condor when it went up for sale this spring. Lufthansa turned down its original interest; then announced new long-haul/low cost flights on Eurowings; then suggested code-sharing with Condor to those destinations where they both will be flying (Seattle, Phoenix, Las Vegas, etc).
There are 150,000 German clients and 7,000 Austrian clients either currently traveling or scheduled to travel in the next several days on TC Germany brands. The insecurity with regard to the level of insurance protection for purchasers of packaged tours is the looming issue for the travel industry as a whole. Many hotels in Tunisia, Greece, Turkey and Egypt are charging clients of TC Germany group upon check-in for their rooms although the clients had paid in-full upfront. The hoteliers as a rule receive their money from TC two months after the clients have checked-out. Who pays for what, and when? These are hugely important, unanswered questions that will cause insecurity to all vacationers, regardless how they booked their vacation/from which tour operator/whether online with an OTA, in a brick-and-mortar travel agency or on their own.
To be continued…