The travel group’s collapse will come to be seen as emblematic of our political eraby Paul Wallace / September 23, 2019 / Leave a comment
Thousands of firms go bust each year unnoticed and unmourned. Even among those that do attract headlines the attention of both the press and the public tends to be fleeting. Only a very few bankruptcies have the capacity to define an era. Who can forget the sight of fraught Lehman bankers with their boxes of belongings outside their Canary Wharf office in September 2008? That snapshot encapsulated the abrupt ending of the excesses of global finance and ushered in a decade of hard economic and mean-spirited political times.
The collapse of Thomas Cook 11 years after Lehman’s is far less epochal in itself. The sudden demise of an international tour operator cannot inflict the same collateral damage as that of a giant global investment bank, whose dealings were perilously intertwined with those of other financial institutions, threatening to topple entire banking systems. Yet in cultural terms this week’s images and stories of the company’s holidaymakers may come to be seen as a defining moment in Britain’s departure from the EU: the moment of the Brexit bankruptcy.
Like Tolstoy’s unhappy families, every failing company fails in its own way. Thomas Cook has collapsed for several distinctive reasons. Chief of them has been the intensifying commercial challenge of the internet where people can arrange their own trips and cut out the middleman. That left the tour operator’s business model as stranded as its holidaymakers this week, with over 500 high-street branches that had become a burden rather than an asset. The firm became saddled with debt as it struggled unsuccessfully to rebuild its decaying fortunes.
The decision to close down the firm came after attempts under way since July to restructure the company’s debts and to inject new funding finally failed. But an underlying factor in the firm’s difficulties has undoubtedly been Brexit and the uncertainties it has generated. Managers pointed the finger at the “uncertain consumer environment particularly in the UK, leading to intense competition” when announcing the first outline of a rescue plan in July. And Brexit has also hurt tour operators because of the weakness of sterling which has dampened demand for foreign travel.
But Thomas Cook will come to be seen as the Brexit bankruptcy more through its impact than its precise causes. For one thing, it is no ordinary firm. Founded in…