Collapse of Thomas Cook: a bankrupt German company

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Thomas Cook Airlines Airbus A320 takes off at Düsseldorf International Airport, Germany, September 23, 2019 — Legend

The German subsidiary believes that by filing for insolvency, it can save its national brands

The German subsidiary of Thomas Cook has announced the opening of bankruptcy proceedings with the aim of rescuing its domestic brands after the bankruptcy of the British parent company on Monday.

Nearly 100,000 holidaymakers travel with German subsidiaries and it is unclear what the bankruptcy procedure will mean for them.

The German government has already granted a bridging loan of € 380m (£ 335m, $ 420m) to the airline Condor.

Condor is 49% owned by Thomas Cook.

The central state of Hesse, where Condor is located, also intervened to help the airline, claiming that it was profitable.

The company said it was "in good health" and that the six-month loan was aimed at avoiding the "bottlenecks" resulting from its British parent company. Funding will be paid pending agreement with the European Commission.

Thomas Cook Germany is also based in Hesse and Prime Minister Volker Bouffier said he was in principle willing to step in to help the company as well.

He said that the low activity of Thomas Cook in Britain and the Brexit had weighed on him for a long time.

How are European tourists affected?

In total, 600,000 vacationers were caught in the collapse of the British company. Many came from the UK but Thomas Cook's empire spread across Europe and tens of thousands of people traveled with its affiliates.

According to the EU rules on package holidays, holidaymakers are financially protected from the bankruptcy of a company and also have the right to be repatriated.

The United Kingdom Civil Aviation Authority has been tasked with bringing back more than 150,000 vacationers. He repatriated more than 14,000 passengers on Tuesday and expected to bring another 16,500 on Wednesday.

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Thousands of Dutch, Belgian and Polish tourists are still abroad, but the largest group affected out of the UK is German. A spokeswoman said Wednesday that 97,000 people were currently traveling with the company.

Thomas Cook Germany employs around 2,000 people and owns several national brands, including Neckermann, Öger Tours, Air Marin and Bucher Reisen. A thousand people are employed by the company near Frankfurt.

She said that she was talking with the German Foreign Ministry as well as with the bankruptcy insurer of the travel sector, Zurich, about repatriating customers. Like Condor, he applied for a bridge loan with the state government of Hesse and the federal government.

Neckermann Polska, a Polish subsidiary of Thomas Cook, suspended its activities and announced its intention to file for bankruptcy.

Why did the German Thomas Cook file for bankruptcy?

The German subsidiary believes that its brands have a future and are currently negotiating with investors and hotel operators.

Thomas Cook GmbH stated that she had been forced to apply for insolvency to get clear of the "financial arrangements and related commitments" of the (UK) parent company.

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"We owe it to our long-standing clients, committed employees and other partners who have supported us so much over the years and the last difficult weeks," said Managing Director Stefanie Berk.

Founded in 1841, the parent company Thomas Cook declared bankruptcy after failing to secure emergency funding of £ 200 million from the British government.

In the United Kingdom, the cost will be refunded to anyone who has purchased a package tour package covered by the Air Travel Licensing System.

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However, some customers whose future vacations have been canceled have seen the price of alternative offers erode.

How have companies around the world been affected?

Countries such as Egypt and Greece fear that tourism losses will affect local businesses financially.

The Gambia the government held an emergency meeting. It is feared that the collapse of Thomas Cook will harm tourism, which provides about a third of the country's GDP
In Egypt, Blue Sky, of Thomas Cook, explained that bookings until April 2020 had been canceled. The company runs many charter flights from the UK to Sharm el-Sheikh and officials say beach resorts will be affected.
In Cyprus, the loss for hoteliers and the entire economy is about 50 million euros, according to the Deputy Minister of Tourism, Savvas Perdios. We owe money to the hotels for July, August and September, he added.
Greek Tourism Minister Grigoris Tassios said hotels are expecting a loss of payments in recent months. He said that they would try to recover Thomas Cook's money in court
In IndiaThe Goa tourism and tourism association said the loss of Thomas Cook was a "big blow to the industry"
From Spain the Balearic Islands faces losses amounting to millions of euros. Thomas Cook has a tax office in Palma with hundreds of employees and also collaborates with hotels located in the Balearic Islands and the Canary Islands.
From Turkey The Federation of Hoteliers (TUROFED) warned that the country could miss up to 700,000 tourists a year because of the collapse.

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