Lessons from the Thomas Cook collapse
After 178 years, Thomas Cook, a global travel group based in the United Kingdom, ceased operations due to financial losses and applied for compulsory liquidation.
It was a shocking end to a conglomerate that arranged holiday travel for about 19 million customers a year and employed 22,000 employees in 16 countries.
In 2018, Thomas Cook earned GBP9.584 billion (or $11.8 billion) in revenues. But early this year, its bottom line started to turn red so it was forced to seek financial assistance from investors to avoid closure. When those efforts proved futile, it declared bankruptcy.
According to reports, Thomas Cook’s collapse may be traced, among others, to the popularity of online travel agents and the growth of low cost airlines. Those factors adversely affected its erstwhile robust revenue stream.
The adjustments Thomas Cook made in its business plans to attract millennials to its leisure and travel programs did not accomplish their objectives.
Modern technology and the shift in leisure preferences by the sector that constitutes a major part of its clientele spelled doom to the century-old company.
Thomas Cook’s collapse validates once again the dictum that established or long standing businesses cannot rest easy on their laurels or be content with their past successes.
They have to acknowledge the fact that business techniques or procedures that worked well before do not guarantee similar results as the demographics and interests of their target market change with the times.
It has been said that in the world of business, change is unceasing and progress cannot mark time. That formula accounts for the continuing success of domestic companies being managed by third or fourth generation family members of their founders.
To the credit of Thomas Cook, despite its debilitating financial condition, it took timely and effective measures to minimize the adverse consequences of its closure.
It could have easily said that in light of its bankruptcy, it would let the court and whoever it may appoint as receiver or liquidator to take over its operations and attend to the needs of its customers.
But it opted not to do a Pontius Pilate, or leave its customers with the proverbial empty bag.
Instead, in coordination with British aviation authorities, it made arrangements for the prompt return of its customers who were in different parts of the world at the time of the closure announcement.
Its action is markedly different from that of some travel or airline companies that went under for financial reasons and left their customers to their own devices finding ways—at their expense—to return to their home bases.
The dream vacations turned out to be nightmares for the abandoned travelers. Suing the concerned companies for damages was not a viable option because the latter had already declared bankruptcy.
The repatriation of Thomas Cook’s customers to their home bases is expected to be completed by the end of this week. Although some of them expressed dismay over the disruption of their travel plans, majority were reported to be satisfied with the action taken by Thomas Cook.
With the issue with the customers almost solved, the next item in the company’s agenda regarding its liquidation is attending to the needs of its soon to be displaced 22,000 employees.
Employees who are covered by the company’s retirement or separation program can look forward to receiving monetary benefits depending on the nature of their work and the length of their employment.
Those who are not covered may have to wait for the completion of the liquidation proceedings. If there are assets that can be sold to raise additional funds for the company, they may receive some financial assistance; otherwise, they will not receive anything.
Considering Thomas Cook’s actions toward its customers, it is reasonable to expect it would be similarly caring to its less fortunate employees.
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