British tourists face being stranded abroad for up to a fortnight as the government prepares to launch the country’s biggest peacetime repatriation mission following the collapse of Thomas Cook.
Last night, the company had been embroiled in talks with shareholders and creditors in a last-ditch bid to secure a deal to keep the ailing company afloat.
However, in a statement issued in the early hours of this morning, the UK Civil Aviation Authority said: “Thomas Cook Group, including the UK tour operator and airline, has ceased trading with immediate effect. All Thomas Cook bookings, including flights and holidays, have now been cancelled.”
Peter Fankhauser, Thomas Cook’s chief executive, said: “We have worked exhaustively in the past few days to resolve the outstanding issues on an agreement to secure Thomas Cook’s future for its employees, customers and suppliers. Although a deal had been largely agreed, an additional facility requested in the last few days of negotiations presented a challenge that ultimately proved insurmountable.
“It is a matter of profound regret to me and the rest of the board that we were not successful. I would like to apologise to our millions of customers, and thousands of employees, suppliers and partners who have supported us for many years. Despite huge uncertainty over recent weeks, our teams continued to put customers first, showing why Thomas Cook is one of the best-loved brands in travel.
“Generations of customers entrusted their family holiday to Thomas Cook because our people kept our customers at the heart of the business and maintained our founder’s spirit of innovation. This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world.”
Grant Shapps, the transport secretary, also described the collapse as “very sad” and said that the government and CAA was “working round the clock to help people”.
“Our contingency planning has helped acquire planes from across the world – some from as far away as Malaysia – and we have put hundreds of people in call centres and at airport,” he said.
Whitehall sources admitted that a rescue operation was likely to be complex and drawn out. With up to 150,000 Britons on Thomas Cook holidays, the potential to cost the taxpayer could be around £600 million.
Yesterday tourists at one hotel in Tunisia claimed to have been “held hostage” as staff ordered them to hand over up to £3,500 each to cover unpaid bills from the tour operator.
Company insiders said that similar scenes were likely to be repeated around the world, with tourist hotspots effectively turned into “refugee camps” as hotels evict holidaymakers.
Chaos is also expected at British airports as passengers arrive for cancelled flgihts. Seventy-seven Thomas Cook Airlines flights were due to depart today from ten airports including Manchester, Gatwick, Birmingham and Glasgow.
The government, led by the Civil Aviation Authority, has spent about six months drawing up its repatriation plan, known as Operation Matterhorn.
However, its approach was criticised yesterday amid claims that it failed to safeguard passengers properly after other airline bankruptcies, including that of Monarch two years ago.
A review published in May called for a reform of company law to allow airlines to continue flying for a short time to repatriate their passengers but the government has yet to formally respond.
A similar system exists overseas, including in Germany where Thomas Cook’s sister airline, Condor, is expected to take part in the operation to repatriate German citizens who have booked flights with it.
Under company law, insolvency means all aircraft will be immediately barred from flying, forcing the CAA to charter aircraft from other carriers. The annonucement of the company’s collapse came while its fleet of 40 British-based aircraft were all on the ground.
British Airways, Virgin Atlantic, Easyjet, Tui, Jet2 and the charter company Titan Airways are among those understood to have been approached.
Officials have said that preparations had been hampered by the grounding of the entire Boeing 737 Max fleet over safety concerns and a number of Boeing 787s over failures of their Rolls-Royce Trent 1000 engine.
It means that the repatriation mission will focus mainly on Thomas Cook-only destinations rather than airports served by other carriers where alternative flights may be available.
Thomas Cook Airlines flies British passengers to 60 destinations as far away as Los Angeles, Florida, Mexico, Cuba and Barbados. The rescue plan has been discussed at a meeting of the emergency Cobra committee. Dominic Raab, the foreign secretary, said: “I can reassure people that in the worst-case scenario the contingency planning is there to avoid people being stranded.”
Brian Strutton, general secretary of the British Airline Pilots’ Association, criticised the failure of the government to act after the bankruptcy of Monarch. He said: “Nothing has been done post-Monarch to stop this shabby collapse of an airline into administration . . . This is a mess that could have been avoided.”
A Department for Transport spokeswoman said that recommendations made in the review “require significant policy and legislative changes”, adding: “The review acknowledged that there is no one-size-fits-all solution.”
Around a million customers are believed to have future bookings with the company, but most package holidays and flights will be Atol protected, meaning they will be given a refund or replacement holiday.
The news comes after Thomas Cook were unable to secure the extra £200 million of funding it needed to stay afloat following a day of crunch talks with lenders and creditors at the City law firm Latham & Watkins.
Fears over the travel giant’s future grew further still yesterday when the booking site Skyscanner pulled all Thomas Cook Airlines flights from its website.
KPMG and the consultancy Alix Partners are expected to handle the insolvency.