As so-called Operation Matterhorn to repatriate British tourists ended on October 7, the situation of the tour operator's subsidiaries and their management of the crisis differ from one country to the next across Europe. Review of the cases for Germany, Austria, Poland and the Nordic countries.
Thomas Cook GmbH and Condor, two different futures
As 555 Thomas Cook retail shops were sold to the travel company Hays Travel in the UK, the German subsidiary is still fighting for its life. Thomas Cook GmbH, based in Frankfurt, owns Thomas Cook Austria, Condor Flugdienst GmbH, and several brands such as Öger Tours, Bucher Reisen, Air Marin and Neckermann Reisen, a very popular tour operator in the country. Thomas Cook GmbH filed for insolvency on 25 September 2019 in order to split from its parent company. Indeed, “the German tour operator is forced to request its placement in receivership to get rid of the complex financial links” with the British company, according to a statement. The subsidiary is in much better health than its parent company, with 2017/18 revenues of 3.8 billion euros, which encounter for more than 40% of the group's total revenues.
But in order to overcome its financial difficulties, the German subsidiary, employing 2,000 people in the country, is looking for a buyer. She applied for financial assistance from the German government. Until then, Thomas Cook GmbH cancelled all reservations until December 31, 2019. Almost all of the 140,000 German tourists have been brought back to homeland, with only few left of them to repatriate. Zurich Insurance handles the repatriation process at the same time as it covers the tourists’ costs, thanks to the insolvency insurance contract. Regarding the payment of claims, Kaera AG will make refunds for customers who have made a claim for a package travel (not valid for a flight or for a hotel reservation alone). As for the trips starting from January 1, 2020, it is not yet determined if they will be cancelled or not. It will depend on the company’s ability to find a buyer.
Condor Flugdienst GmbH (or “Condor”, in its short form) is profitable with 58 aircraft serving more than 8 million passengers per year and more than 100 destinations worldwide. Subject to validation by the European Commission, it succeeded in obtaining a bridge loan from the German government of 380 million euros to maintain its operations for a period of six months. The airline has three months to plan the future, in terms of management, investments, business model and operations.
Ralf Teckentrup, CEO of Condor, said about the airline:
"Condor is a healthy and profitable company, which will also record a positive result for the current year. Since our insolvent parent company used our cash for the winter period, the lowest booking season, we need this bridge financing for the next winter season."
It is now a matter of separating from the UK head office, to avoid any potential future claims, through a protection procedure specific to German business law.
Thomas Cook Austria AG cancelled all trips as of November 1
The Austrian subsidiary also filed for insolvency on 25 September, leading to the cancellation of all travel from that date until the end of October. A repatriation operation has also been set up for 4,500 Austrian holidaymakers. Now there are only 700 people left to bring back to the Central European Republic. On October 4, the Austrian subsidiary of the British group announced the cancellation of all travel from November 1 as well. For people who have booked with a travel agency and paid a deposit for a stay from October 5, they can request a refund from the agency, or postpone their trip. The customers who paid directly to Thomas Cook will be refund by Allianz Partners, which has set up an e-mail address specifically dedicated to this case: email@example.com.
Gregor Kadanka, President of the Professional Association of Travel Agencies of the Austrian Chamber of Commerce (WKÖ), said:
“Financial damages for customers who have booked a package tour will not be awarded due to the mandatory insolvency protection for organizers (...) Thomas Cook Austria AG is protected against insolvency with more than 20 million euros. Apart from the disadvantages that have resulted, package travelers who have booked with the Austrian subsidiary will therefore probably not have to accept financial losses.”
The subsidiary, which a staff of 57 people, has a 38 million euros debt. The current insolvency proceedings may not cover the full repayment of these debts.
Neckermann Polska in Poland
The Polish subsidiary, Neckermann Polska, also filed for insolvency, in addition to having asked its government to repatriate 3,600 Polish nationals abroad. The director, Maciej Nykiel, sent his regrets and apologized in a statement to the travel industry, saying that he had “done everything to save Neckermann” and its 140 employees. But despite all these efforts and the profitability, Neckermann Polska was also forced into insolvency. The bankruptcy of the subsidiary has cost PLN 4.5 million so far.
Good news for tourists who booked with them, they are covered by the Tourism Guarantee Fund. The repatriation, covered by the guarantee of one million zlotys, is nevertheless the responsibility of the regional authorities in Poland, as reported by the Deputy Marshal of the Mazovia Region, an administrative region including Warsaw. Today, only about twenty tourists are still waiting to return home. As for receivables, generated by the costs of tourists in their holiday destination, the subsidiary asked its insurer, the same as that of its German sister, Allianz Partners, to pay its customers' hotel and travel agency bills. However, tense situations have been encountered by Polish tourists in some destinations, such as “blocking access to the room, keeping passports or calling the police” in the hotels.
Thomas Cook Northern Europe remains practically “untouched”
Like Thomas Cook India and Thomas Cook China, which are still standing thanks to a more diversified business model, Thomas Cook Northern Europe is also an independent entity of the group, enjoying its own legal status since 2007. It includes tour operators Ving, Globetrotter, Spies, Tjäreborg, Thomas Cook Airlines Scandinavia and the hotel company Hotels & Resorts, which includes its own chains of Sunwing Family Resorts, Ocean Beach Club and Sunprime Hotels. Thanks to an “integrated business model” meaning that “tour operators, airlines and hotels are fully integrated”, Thomas Cook's Scandinavian branch can maintain its business in Denmark, Sweden, Norway and Finland.
Thanks to its profitability and independence, it was able to obtain a loan from a Norwegian bank to maintain its operations. Thomas Cook Airlines Scandinavia is one of the most profitable tourism companies in Northern Europe for many years. It will thus be able to continue “operations and traffic as usual” with a fleet of 12 Airbus aircraft operating from Denmark, Sweden and Norway.
Magnus Wikner, CEO of Ving (who is the successor to Thomas Cook Airlines Scandinavia) explained:
“As an independent and profitable part of the group, we are already able to secure our activities with the support of our banks, lenders and guarantors.”
When Thomas Cook's bankruptcy was announced, 20 flights were cancelled on Monday 23 September, forcing 1,554 people to stay in their destinations and preventing 1,706 travellers from leaving Sweden. But the next day, most of the delayed and blocked clients were put back on flights so that they could complete or end their stay as planned. Those who could not take off could make a claim for a refund of their trip.
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