You may or may not have heard of the company Thomas Cook, so here’s a quick background: Thomas Cook is a travel company based in the United Kingdom. It’s been around for 178 years and has planned millions of vacations for its customers. In addition to its travel-planning services, Thomas Cook also owns a fleet of airplanes and hotels. Needless to say, it’s a very large and well-known travel company and one that has provided vacationers with all of their travel needs for many, many years. But satisfied customers and happy vacationers came to an end earlier this week when Thomas Cook suddenly shut down all of its business operations. That’s right—it’s as if they had a virtual and permanent “Closed” sign but didn’t warn any of its customers beforehand.
What happened? How can a company that’s been around for 178 years shut shop just like that? It’s an unfortunate tale but one that has been unraveling for quite some time now. First, think about how booking a vacation has changed over the past few decades. Ask your parents if they book family vacations online or through a travel agency. With online travel-booking sites like Expedia and Priceline, and vacation rental and accommodations sites such as Hotels.com and AirBnB changing the way people book vacations, it’s no wonder that companies like Thomas Cook have a hard time competing for customers. Furthermore, Thomas Cook carried a lot of debt. Simply put, it owed banks and other institutions a lot of money. By the time it had shut its doors, its debt was £1.7 billion—that’s approximately $2.1 billion. Banks no longer wanted to lend them money (to get themselves out of debt), and the company could no longer pay for its outstanding debts. Bad business decisions were also made, and rising operating costs such as the cost of jet fuel didn’t help the company either.
So, what now? Suddenly, 22,000 people no longer have jobs, and tens of thousands of travelers no longer have vacations to head to, nor a means to get there. While some airlines are stepping in to help stranded travelers and are even offering to hire some of Thomas Cook’s employees, it looks like this sudden shutdown will be felt for much longer than after the last traveler has reached their final destination.