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