Thomas Cook col­lapse prob­lem­atic for Transat

The Prince George Citizen - - Money -

Transat Inc. could face fall­out from the col­lapse of Thomas Cook Group Plc af­ter a part­ner­ship be­tween the com­pa­nies died Mon­day.

The tour op­er­a­tor, which runs Air Transat, was in the sec­ond year of a seven-year deal to ex­change air­craft with the Bri­tish com­pany’s air­line on a sea­sonal ba­sis.

The Mon­treal-based Transat was slated to re­ceive at least seven jet­lin­ers from Thomas Cook this fall, but “the part­ner­ship is dead be­cause the com­pany no longer ex­ists,” spokesman Christophe Hen­nebelle said.

He said Transat, which is work­ing to com­plete its takeover by Air Canada next year, is “con­fi­dent” the Air­bus A321 planes will still come through, but is mak­ing con­tin­gency plans.

“We’re not wait­ing un­til the last minute. We’re work­ing to re­ceive the planes, and at the same time we’re think­ing of other plans to make sure that the sched­ule will be re­spected,” Hen­nebelle told The Cana­dian Press.

Hun­dreds of thou­sands of trav­ellers were stranded across the world Mon­day af­ter Thomas Cook col­lapsed, halt­ing al­most all its flights and ho­tel ser­vices and lay­ing off all its em­ploy­ees as the com­pany ceased trad­ing.

The liq­ui­da­tion of the 178-yearold travel com­pany, which helped cre­ate the pack­age tour industry, will have sweep­ing ef­fects across the Euro­pean and North African tourism industry and else­where, as ho­tels wor­ried about be­ing paid and con­firmed book­ings for high-sea­son win­ter re­sorts were sud­denly in doubt.

Nasim Lalji, who lives in Bramp­ton, Ont., was sched­uled to take a Thomas Cook flight from Lon­don to Turkey next week with her hus­band un­til the flight was can­celled Mon­day.

The cou­ple, who paid about $307 each for the trip, said they were promised a full re­im­burse­ment and were in the process of re­book­ing with an­other air­line Mon­day. “But that is go­ing to cost us way more than what our ini­tial price was,” Lalji said.

Flights from Lon­don to Turkey’s Dala­man Air­port cost­ing less than $500 early Mon­day morn­ing rose to nearly $600 a few hours later, she said.

“Every minute you de­lay book­ing your flight, the prices go up... be­cause every­body is now try­ing to find other op­tions,” Lalji said. “It is a ma­jor in­con­ve­nience.”

Global Af­fairs Canada said Cana­dian cit­i­zens in need of con­sular as­sis­tance should contact its emer­gency watch and re­sponse cen­tre in Ot­tawa.

“To date, we have no re­ports of any Cana­dian cit­i­zens be­ing af­fected by the col­lapse of the Bri­tish tour op­er­a­tor Thomas Cook,” the depart­ment said in an email.

Thomas Cook said four of its five air­lines will be grounded, and its 21,000 em­ploy­ees in 16 coun­tries – in­clud­ing 9,000 in the U.K. – will lose their jobs.

Over­all, about 600,000 peo­ple were trav­el­ling with the com­pany as of Sun­day, though it was un­clear how many of them would be left stranded, as some travel sub­sidiaries were in talks with local au­thor­i­ties to con­tinue op­er­at­ing.

The com­pany, whose air­lines, re­sort and ho­tels served 19 mil­lion peo­ple a year in 16 coun­tries, had a lim­ited pres­ence in Canada.

Con­dor Flug­di­enst, Thomas Cook’s main Ger­man car­rier, is the only one that flies to Canada, with sea­sonal flights from Frank­furt to Toronto, Van­cou­ver, Cal­gary, Hal­i­fax and White­horse. While all flights took off as planned Mon­day, Con­dor has re­quested fi­nan­cial aid from the Ger­man gov­ern­ment in a bid to keep the sub­sidiary afloat, it said in a re­lease.

The im­pact of Thomas Cook’s down­fall is “pretty small” for Cana­dian air­lines, travel agents and tourists, said Robert Koko­nis, pres­i­dent of Toronto-based con­sult­ing firm AirTrav Inc.

“We’d only see a ben­e­fit re­ally to Air Canada if Con­dor stops fly­ing. Their ca­pac­ity to Canada is not that large.” he said.

“Most of what Thomas Cook was do­ing was va­ca­tion busi­ness out of Europe – out of the U.K., out of Scan­di­navia, out of Germany – pri­mar­ily to sun des­ti­na­tions. And that’s the busi­ness that’s been hit hard. It’s not like your av­er­age Cana­dian travel agent had a bunch of brochures on their racks to buy it.”

The com­pany, which be­gan in 1841 with a one-day train ex­cur­sion in Eng­land, has been strug­gling for years due to com­pe­ti­tion from bud­get air­lines and the ease of book­ing low-cost ac­com­mo­da­tions through the in­ter­net, par­tic­u­larly in Europe.

“Whether it’s easyJet or Ryanair or Wizz Air or Nor­we­gian, you can go get an el cheapo flight... and then go get your own ho­tel and de­sign your own tour,” Koko­nis said.

The Bri­tish gov­ern­ment said it was tak­ing charge of get­ting the firm’s 150,000 U.K.-based cus­tomers back home from va­ca­tion spots across the globe, the largest repa­tri­a­tion ef­fort in the coun­try’s peace­time his­tory. The process be­gan Mon­day and of­fi­cials warned of de­lays.

A stream of re­ports Mon­day morn­ing gave some sense of the ex­tent of the travel chaos: some 50,000 Thomas Cook trav­ellers were stranded in Greece; up to 30,000 stuck in Spain’s Ca­nary Is­lands; 21,000 in Turkey and 15,000 in Cyprus alone.

An es­ti­mated one mil­lion fu­ture Thomas Cook trav­ellers also found their book­ings for up­com­ing hol­i­days can­celled. Many are likely to re­ceive re­funds un­der travel in­sur­ance plans. Fehr said bank stocks are fac­ing head­winds be­cause the pace of loans isn’t sus­tain­able amid emerg­ing eco­nomic weak­ness. “I think that’s go­ing to con­tinue to be a head­wind for banks over­all and lest we for­get in­ter­est rates con­tinue to remain ex­cep­tion­ally low so while that might be help­ful for de­mand of loans, the prof­itabil­ity of those loans is a lit­tle bit im­paired by the rate en­vi­ron­ment,” he said. In­dus­tri­als and tech­nol­ogy were also lower.

Ma­te­ri­als led as the price of gold con­tin­ued to rise. First Quan­tum Min­er­als Ltd. closed up nearly 10 per cent af­ter it de­nied spec­u­la­tion last week about a pos­si­ble bid for the com­pany by Chi­nese min­ing com­pany Jiangxi Cop­per Corp. Ltd. The De­cem­ber gold con­tract was up US$16.40 at US$1,531.50 an ounce and the De­cem­ber cop­per con­tract was up half a cent at US$2.61 a pound. En­ergy was up slightly on a lift in crude oil prices that helped Cana­dian Nat­u­ral Re­sources and En­cana Corp. The Novem­ber crude con­tract was up 55 cents at US$58.64 per barrel and the Novem­ber nat­u­ral gas con­tract was un­changed at US$2.56 per mmBTU.

The Cana­dian dol­lar traded for an av­er­age of 75.36 cents US com­pared with an av­er­age of 75.33 cents US on Fri­day.

In New York, the Dow Jones in­dus­trial av­er­age was up 14.92 points at 26,949.99. The S&P 500 in­dex was down 0.29 points at 2,991.78, while the Nas­daq com­pos­ite was down 5.21 points at 8,112.46.

U.S. mar­kets were mixed while Euro­pean and global eq­uity mar­kets were lower on data show­ing that Germany con­tin­ues to grap­ple with a man­u­fac­tur­ing slow­down that is ham­per­ing the growth of Europe’s largest econ­omy.

In the back­drop are on­go­ing trade ten­sions be­tween the United States and China. Both sides have sug­gested that last week’s meet­ings were pos­i­tive even though the Chi­nese del­e­ga­tion can­celled its tour of U.S. farms. Bar­ring any ma­jor news, the mar­ket has in­ter­preted no trade news as be­ing pos­i­tive, said Fehr.

“The mar­ket is re­ally look­ing for the big deal. The mar­ket is wait­ing to see if there will be some grand com­pro­mise which I think ul­ti­mately there can be but I don’t think it’s hap­pen­ing any time soon.”

CP FILE PHOTO

Seats in a Transat A.T. Air­bus A330 are pic­tured in Mon­treal.

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