NEW YORK/LONDON (Reuters) - After the collapse of Thomas Cook left hundreds of thousands of passengers reliant on the British state to repatriate them, Prime Minister Boris Johnson questioned whether bosses should have paid themselves so much ahead of its demise.
A passenger hauls his luggage past a sign of the collapsed travel firm Thomas Cook at Jerez de la Frontera Airport, Spain September 23, 2019. REUTERS/Jon Nazca
Running hotels, resorts and airlines for 19 million people a year, it currently has around 600,000 people abroad and will need the help of governments and insurance firms to bring them home from places as far afield as Cancun, Cuba and Cyprus.
Speaking in New York, Johnson questioned why the state should be left responsible for the actions of handsomely paid directors and said tour operators should have some sort of insurance against such debacles.
“I have questions for one about whether it’s right that the directors, or whoever, the board, should pay themselves large sums when businesses can go down the tubes like that,” Johnson said.
“You need to have some system by which tour operators properly insure themselves against this kind of eventuality,” he said.
Thomas Cook was brought down by a $2.1 billion debt pile, built up by a series of ill-fated deals, that hobbled its response to nimble online rivals. It had to sell three million holidays a year just to cover interest payments.
With the business draining cash, Chief Executive Peter Fankhauser found its lenders were no longer willing to step in. Fankhauser has earned 8.3 million pounds, including 4.3 million pounds in 2015.
The British government decided Thomas Cook was a bet it did not want to take.
Thomas Cook’s demise, announced in the early hours of Monday after failing to secure a deal with creditors or a government bailout, sparked alarm at hotels where some customers have been asked to pay their bills again by out-of-pocket resort owners.
“I think the questions we’ve got to ask ourselves now: how can this thing be stopped from happening in the future?” Johnson said.
“How can we make sure that tour operators take proper precautions with their business models where you don’t end up with a situation where the taxpayer, the state, is having to step in and bring people home?”
Emergency flights brought 14,700 people back to the United Kingdom on 64 flights on Monday, and around 135,300 more are expected to be returned over the next 13 days, Britain’s aviation regulator said.
Seventy-four flights were scheduled on Tuesday, to bring back 16,500 people. More than 1,000 flights are planned.
“A repatriation of this scale and nature is unprecedented and unfortunately there will be some inconvenience and disruption for customers. We will do everything we can to minimize this as the operation continues,” Richard Moriarty, Chief Executive at the Civil Aviation Authority, said.
“We want people to continue to enjoy their holiday, so we will bring them back to the UK on their original departure day, or very soon thereafter.”
Writing by Guy Faulconbridge, Editing by Paul Sandle
Apple announced last night it’ll be manufacturing the newest Mac Pro in Austin, Texas. That makes the high-end device the company‘s only major product to be assembled in the US.
This comes after a report from Bloomberg last week saying Apple has obtained tariff waiver for 10 out of 15 parts it had requested the exemption for.
The Cupertino-based firm’s CEO, Tim Cook, said the company is proud to be building the Mac Pro in Austin:
The Mac Pro is Apple’s most powerful computer ever and we’re proud to be building it in Austin. We thank the administration for their support enabling this opportunity,
Apple had reportedly planned to make its new high-end computers earlier in China while seeking relief from import tariff. However, in July President Donald Trump tweeted there will be no waiver from tariffs for parts that are made in China.
Apple will not be given Tariff waiver, or relief, for Mac Pro parts that are made in China. Make them in the USA, no Tariffs!
Later, in the company‘s earnings call, Cook had mentioned Apple wants to keep making Mac Pros in the US. The previous version of the Mac Pro was also assembled in Texas by a company called Flex.
While Apple will get relief from tariffs by producing its powerful computer in the US, it doesn’t rake in tens of billions of dollars to the company. According to the last quarter’s financial sheet, Mac (including MacBooks and other desktop models) has a little over 10 percent share in Apple’s revenue.
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Worries over global economic growth were set to thwart Wall Street's run to record highs on Monday. Stock futures pointed to a slightly lower open on Monday. IHS Markit data showed Germany's manufacturing activity hit its lowest level in more than 10 years. Overall, the euro zone's services sector grew at its slowest pace in eight months while manufacturing activity hit a more than six-year low. Stocks snapped a three-week winning streak on Friday. The data comes as China and the U.S. try to strike a trade deal.
2. China says US trade talks were 'constructive'
President Donald Trump (L) and China's President Xi Jinping walk along the front patio of the Mar-a-Lago estate after a bilateral meeting in Palm Beach, Florida, April 7, 2017.
Carlos Barria | Reuters
Senior Chinese trade officials said Saturday that discussions with the U.S. last week were "constructive," according to China's state-run news agency Xinhua. The officials said both sides "agreed to maintain communication." U.S. officials echoed China's sentiment, saying in a statement that talks were "productive." Both countries are set to hold formal trade negotiations early next month.
3. WeWork CEO in the hot seat as SoftBank in favor of his ousting
Adam Neumann, co-founder and chief executive officer of WeWork.
Michael Nagle | Bloomberg | Getty Images
CNBC learned through a source that Masayoshi Son, the head of Japanese conglomerate SoftBank, is in favor of WeWork CEO Adam Neumann's removal from his post. SoftBank is WeWork's largest outside shareholder. The news, which was first reported by The Wall Street Journal, comes after WeWork postponed its initial public offering. The real-estate start-up's valuation may have fallen to less than $15 billion, according to a report from CNBC's David Faber earlier this month. WeWork's valuation in the private market was as high as $47 billion.
4. Wall Street wonders if the move toward record highs can be trusted
Trader on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Stocks have recently challenged the records set in late July, with the S&P 500 about 1.2% below its all-time high. But some investors wonder if this move can be trusted, writes Michael Santoli. The next three weeks have historically been among the most volatile in the calendar for stocks. Investors will also grapple with the back and forth between U.S. and Chinese trade officials as negotiations continue. To be sure, there are signs the move up may be trustworthy. A running count advancing versus declining NYSE stocks hit a record high last week. This often precedes new highs for the market.
5. Disney called off a deal to buy Twitter, CEO says the 'nastiness is extraordinary'
Mickey Mouse and chief executive officer and chairman of The Walt Disney Company Bob Iger prepare to ring the opening bell at the New York Stock Exchange (NYSE), November 27, 2017 in New York City.
Getty Images
Bob Iger, Disney's chief executive, said in an interview with The New York Times that the media giant walked away from a deal to buy social media company Twitter. Iger said Twitter was a "compelling" way to reach consumers. However, he said the Twitter's trouble "were greater than I wanted to take on, greater than I thought it was responsible for us to take on," adding: "The nastiness is extraordinary." Twitter has been trying curb harassment on its platform from so-called trolls.
CNBC's before the bell news roundup
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The first of 155,000 British tourists are being flown back home after travel agent Thomas Cook collapsed on Monday.
The UK's Civil Aviation Authority (CAA) is co-ordinating the repatriation, the biggest in peacetime, after the tour operator "ceased trading with immediate effect".
Thomas Cook's administration puts 22,000 jobs at risk worldwide, including 9,000 in the UK.
Boss Peter Fankhauser said the collapse was a "matter of profound regret".
Thomas Cook, whose roots go back to 1841, went bust after last-ditch talks to raise fresh funding failed. The BBC understands the government was asked to fund a bailout of £250m, which was denied.
Some 16,000 holidaymakers were booked to come back on Monday, and authorities hope to get at least 14,000 of them home on chartered flights.
The CAA - an arms-length body set up by the Department for Transport (DfT) - has chartered 45 jets to bring customers home from locations including Central America and Turkey. It will fly 64 routes on Monday in an undertaking called Operation Matterhorn.
Operators including easyJet and Virgin have supplied some aircraft, with jets coming from as far afield as Malaysia.
All Thomas Cook holidays are now cancelled and customers will need to seek compensation via the government's Atol scheme, or from their credit card or insurance companies.
Some passengers trying to get home have reported queues and disruption at airports, while others complain they have been left in the dark about what happens next.
Customers seeking information can visit the CAA's special Thomas Cook website. Those scheduled to return to the UK within the next 48 hours or who are having problems with their accommodation or need special assistance can ring 0300 303 2800 in the UK or +44 1753 330 330 from abroad.
What is the government doing?
Transport Secretary Grant Shapps defended the move not to grant Thomas Cook a bailout.
"I fear it would have kept them afloat for a very short period of time and then we would have been back in the position of needing to repatriate people in any case," he said on the BBC's Today programme.
The company's large debts and High Street-focused business made it a poor candidate for survival, he said.
Overall, Operation Matterhorn will cost the taxpayer around £100m, he added.
Shadow chancellor John McDonnell told the BBC the government should have bailed out Thomas Cook, "if only to stabilise the situation while a real plan for the future of the company could be addressed".
Prime Minister Boris Johnson pledged to help stranded holidaymakers, but also questioned whether company directors were properly motivated to "sort such matters out".
'I feel completely devastated'
Ruth Morse, from Halesowen, West Midlands, was due to marry her partner in Cyprus on 8 October, but now doubts the wedding will go ahead.
She booked the whole event through Thomas Cook, including the decorations, the cake, wedding venues and a private bar.
And of the 44 guests due to attend, about 25 booked their flights and accommodation through the travel agent.
"At the moment, Thomas Cook have not been in contact, so we are in the dark," Ruth says.
"I know we are protected by Atol, but I'm unsure about the things we bought from third parties through Thomas Cook, like the decorations. They cost me £4,000."
Ruth says she had planned her "dream wedding" for two years. What makes it doubly hard is that much of the money she spent came from family members, including her mother and her late brother Ben, who was murdered in 2017.
"From the grief we had, we pulled ourselves together to arrange our dream day," she says.
"We will rebook the wedding, but I won't do it abroad again because I have lost faith. I feel completely devastated by all of this."
How will holidaymakers get home?
While an estimated 150,000 Britons are affected by Thomas Cook's collapse, the company has up to a further 450,000 customers abroad, some of whom have been affected.
In Germany, one of Thomas Cook's main markets, insurance companies will help organise the response to its collapse.
UK customers will be brought home "as close as possible" to their booked return date, the Department for Transport (DfT) has said.
The DfT added that a "small number" of passengers might need to book their own flight home and reclaim the costs.
Customers have been urged not to cut short their holiday or go to the airport without checking the website for more information about their return journey.
The CAA is also contacting hotels accommodating Thomas Cook customers, who have booked as part of a package, to tell them that the cost of their accommodation will be covered by the government's Air Travel Trust Fund and Air Travel Organiser's Licence scheme (Atol).
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Tim Johnson, policy director of the CAA, told BBC News that customers whose future holidays had been cancelled would be informed of how they can claim a refund on the website.
Business Secretary Andrea Leadsom has said she will write to the Insolvency Service urging them to "fast-track" their investigation into the circumstances surrounding Thomas Cook's going into liquidation.
The investigation will also consider the conduct of top directors, who have been paid a combined £20m in salaries and bonuses since 2014.
A Cabinet spokesman said: "People will rightly look at the size of bonuses to some of the directors and have serious concerns about that.
"There's a broader issue at play about collapsing firms and director pay and we are looking that more broadly as a government."
GETTY
Thomas Cook in numbers
22,000jobs at risk worldwide
9,000 jobs at risk in the UK
150,000 British holidaymakers to be repatriated
600,000total customers abroad
34 planesowned (Airbus A321 and A330)
Source: Thomas Cook
What happens to staff?
Employees at some Thomas Cook shops have already been met with representatives of the firm's administrators, who told them they would be made redundant.
Jobs at the tour operator's airline and in its engineering division may also go.
Some workers are being kept on, however, but there is no definite number.
Thomas Cook shops across the UK are not due to open on Monday.
What about Thomas Cook's international operations?
For now, Thomas Cook's Indian, Chinese, German and Nordic subsidiaries will continue to trade as normal.
This is because, from a legal standpoint, they are considered separate to the UK parent company and are not under the jurisdiction of the UK's Official Receiver.
They do, however, share services - such as aircraft and IT - with their parent company and will need to strike rescue deals in the coming weeks to keep trading.
What went wrong?
Thomas Cook had secured a £900m rescue deal led by its largest shareholder Chinese firm Fosun in August, but a recent demand from its banks to raise a further £200m in contingency funding had put the deal in doubt.
Fosun said in a statement: "We extend our deepest sympathy to all those affected by this outcome."
The holiday company spent all of Sunday in talks with lenders trying to secure the additional funding and salvage the deal, but to no avail.
Thomas Cook has blamed a series of issues for its problems, including political unrest in holiday destinations such as Turkey, last summer's prolonged heatwave and customers delaying booking holidays because of Brexit.
Speaking to BBC News from Manchester airport, travel expert Simon Calder said Thomas Cook "wasn't ready for the 21st Century".
"Now everybody can pretend they are a travel agent. They've got access to all the airline seats, hotel beds, car rentals in the world and they can put things together themselves.
Mr Calder, travel editor at The Independent, added that planes at the airport began to be impounded shortly after 00:00 BST.
While the company was closing shops to try and cut costs, closing 21 in March, it still had more than 500 outlets, bringing large costs compared to online competitors.
In another sign of its slow progress in mending its finances, it only stopped dividend payments to investors in November.
What are your rights?
If you are on a package holiday, you are covered by the Atol scheme.
The scheme will pay for your accommodation abroad, although you may have to move to a different hotel or apartment.
Atol will also pay to have you brought home if the airline is no longer operating.
If you have a holiday booked in the future, you will also be refunded by the scheme.
If you have booked a flight-only deal, you will need to apply to your travel insurance company or credit card and debit card provider to seek a refund.
When Monarch Airlines collapsed in 2017, the government organised to bring home all the stranded passengers, whether they were covered by Atol or not.
Are you a Thomas Cook customer or member of staff? If you've been affected by the issues raised here, you can get in touch by emailing haveyoursay@bbc.co.uk.
Please include a contact number if you are willing to speak to a BBC journalist. You can also contact us in the following ways:
Investing.com -- WeWork's CEO and founder Adam Neumann may go the way of Uber's Travis Kalanick, and there's no end in sight to the slowdown in global manufacturing. Here's what you need to know in financial markets on Monday, 23rd September.
1. Softbank looks for the ejector seat button
Softbank, the largest outside shareholder in We Company, is pushing for CEO and founder Adam Neumann to be replaced as chief executive of , the loss-making provider of shared office space.
The Financial Times reported that Softbank had lost patience with Neumann’s erratic behavior and leadership, which has led to delays in the company’s IPO. It added that a board meeting to demote Neumann may take place as early as this week. The move echoes events at Uber Technologies (NYSE:) two years ago, when founder Travis Kalanick was forced out by outside investors.
WeWork aside, it’s set to be a heavy week for IPOs, with exercise bike-maker Peloton also reportedly struggling to drum up interest. ’s Asia deal and European software group TeamViewer are also due in the course of the week.
2. PMIs suggest downturn still continuing
The latest raft of monthly business surveys from around the world suggested no end in sight to the global manufacturing slowdown.
The euro zone’s purchasing managers index fell at its fastest rate in over six years to 50.4, suggesting the economy nearly stalled at the end of the third quarter, according to IHS Markit. in Germany, for years the most reliable source of growth in the region, fell at its fastest since the Great Recession in 2009.
Australia’s also fell below the 50 level that separates growth from contraction. IHS’s U.S. PMI will be released at 9:45 AM ET (1345 GMT).
Outgoing ECB President Mario Draghi is due to address the European Parliament later, although it's widely expected he'll leave any further monetary reaction to his successor, Christine Lagarde.
3. Stocks to open mixed on trade hangover, economic weakness
U.S. stock markets are set to open mixed to lower on follow-through from the sell-off that happened on Friday after the mood music on trade turned slightly more confrontational.
Sentiment over the weekend hasn’t been helped by another rise in oil prices (see below) amid reports that Iran is planning another strike on Saudi oil facilities (the Islamic Republic still denies any involvement in the attacks nine days ago).
By 6:15 AM ET, were down 22 points, or 0.1%, while were flat and were up 0.2%.
Risk aversion appears to have returned to markets, with the U.S. Treasury yield falling to a two-week low of 1.69%, down 4 basis points from Friday’s levels.
4. Oil bounce fades
are vacillating sharply, rising in the wake of the reports about another Iran strike, and gaining further on the back of a Wall Street Journal report suggesting that it may take months to get Saudi Arabia’s oil installations back to fully-functional.
Saudi Arabia pushed back against the report on Monday, saying that production will be restored by the end of next week.
That’s caused crude prices to drop back again to $57.70 a barrel by 6 AM ET, their lowest since the attacks on the Abqaiq processing facility and Kurais oilfield.
On Friday, data from had shown the number of active oil rigs in the U.S. fell to its lowest since spring 2017, while the reported that hedge funds had used last week’s spike in prices to reduce long positions, apparently fearful that the economic slowdown will cause a new glut.
5. U.K. Labour to Remain?
The U.K. Labour party is set to throw its weight firmly behind remaining in the EU at the next election.
Reports suggest a motion at Labour’s annual conference today embracing Remain over the objections of leader Jeremy Corbyn will pass. Paradoxically, that may make Brexit more likely rather than less, as it could harden the split between Remain-leaning parties at the next election, which is expected by many before year-end.
The fell against the dollar in early trade in Europe, after further signs of political instability emerged over the weekend with a report that Prime Minister Boris Johnson failed to disclose large grants of public money made to a close friend and former model while he was Mayor of London.
U.S. equity futures were indicating a higher open on Monday when trading begins on Wall Street as trade tensions ease.
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Dow Industrial futures are 0.1 percent higher, S&P 500 futures are gaining 0.1 percent and Nasdaq futures are adding 0.2 percent.
Optimism increased over the weekend as the U.S. and China referred to last week's talks as "productive" and "constructive."
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A higher-level round of talks is still scheduled to go ahead in October.
Wall Street ended last week with losses, snapping a 3-week winning streak for the S&P 500 after reports emerged that Chinese officials canceled a planned trip to farms in Montana and Nebraska.
The S&P 500 fell 0.5 percent, the Dow Jones Industrial Average dropped 0.6 percent and the Nasdaq lost 0.8 percent.
In Asian trading on Monday, the Shanghai Composite index closed down 1.1 percent while Hong Kong's Hang Seng fell 0.8 percent after yet another weekend of violent protests.Tokyo's markets were closed for a holiday.
Fosun Tourism Group, the biggest shareholder in Thomas Cook, fell 3.8 percent in Hong Kong after the 178-year-old British tour company collapsed.
Bookings for more than 600,000 global vacationers were canceled Monday as a result.
Shanghai-based Fosun International dropped 1 percent.
Britain's Civil Aviation Authority said Thomas Cook's four airlines would be grounded and its 21,000 employees in 16 countries, including 9,000 in the UK, will lose their jobs.
In Europe, London's FTSE was off 0.2 percent, Germany's DAX was down 1 percent and France's CAC lost 0.7 percent.
FBN's Lauren Simonetti talks to Conde Nast Traveler Contributing Editor Mark Ellwood about the last-minute travel destinations for the July 4th weekend and the latest travel trends.
Thomas Cook, a British travel company that's been around for more than 100 years, met with shareholders on Sunday in the company's fight to avoid bankruptcy.
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Thomas Cook confirmed Friday that it is seeking 200 million pounds in new capital. The company's largest shareholder is Chinese investment company Fosun.
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The money required would be a "seasonal stand-by facility" and come on top of the 900 million pounds of new capital already raised, the company said.
Any failure to raise the required capital would elicit questions about the jobs of the 22,000 staff Thomas Cook employs around the world, including 9,000 in Britain.
A collapse could leave around 150,000 travelers from Britain stranded, along with tens of thousands of travelers from other countries. The British government may have to lease planes to get its citizens home.
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FILE - In this May 19, 2016 file photo, a Thomas Cook plane takes off in England. Thomas Cook, one of the world’s oldest and largest travel companies, is facing a race against time to stay afloat it was announced Friday, Sept. 20, 2019. (Tim Goode/PA
United Kingdom foreign minister Dominic Raab acted as though a government bailout of the travel firm was unlikely, The Guardian reported.
Thomas Cook's predicament comes about half a year after Icelandic budget airline Wow Air said in a statement that it has ceased operations, stranding passengers.
