Thomas Cook on verge of collapse as XL Airways folds

News broke this morning that package holiday firm Thomas Cook could fall into administration over the weekend unless it secures £200m funding from banks. As the day went on, it became clear the company was looking to the UK Government to plug the shortfall. The firm, which operates as Thomas Cook in the UK and Condor in mainland Europe, carried 8 million passengers on its own-branded airline last year. It’s estimated that 600,000 holidaymakers are currently abroad and may need to be repatriated in the event of the airline’s failure.

The demise of the package holiday

Thomas Cook has been struggling to compete with low-cost carriers who have risen to dominance over the past decade. The behaviours of holidaymakers are changing, with sites like Expedia and offering flight+hotel deals and Airbnb offering highly affordable accommodation. Having already borrowed heavily to keep going (estimated to be around £1bn) the beleaguered travel firm will have to work hard to convince financiers – the company has lost 95% of its share price in a year.

A repeating pattern

The news of Thomas Cook broke just days after French low-cost carrier XL Airways announced it had stopped selling tickets and had gone into receivership. It also hinted that flights would start being cancelled, potentially leaving passengers stranded and out-of-pocket. XL operated just 4 aircraft out of Paris-Charles de Gaulle Airport to several long-haul destinations in the Caribbean and USA.

La Compagnie A320neo
A new La Compagnie A320neo

Only a year ago French all-business class airline La Compagnie announced it had acquired XL Airways. It’s still too early to gauge how the collapse of XL Airways affects La Compagnie, although tickets are still on sale and flights are operating. La Compagnie is yet to comment.

Just three weeks earlier, another French carrier Aigle Azur grounded its fleet as it called in the receivers. Many airlines are struggling to survive in the highly-competitive European market, with excess capacity on most routes driving fares lower and lower. It’s an uncertain time for many working in the airline industry. For passengers, this uncertainty brings an abundance of cheap seats but the risk of being left stranded. For extra protection, the general advice is to book tickets with a credit card and check your travel insurance covers airline failure.


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