Is Thomas Cook Airline On the Verge Of Collapse?

May 19, 2019

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

As TPG has reported, many international airlines have succumbed to extreme financial pressures in the not too distant past. Now, European travel conglomerate Thomas Cook appears to be on the verge of collapse after its stock nosedived 44% on Friday to end the week trading at only 16 cents per share.

While Thomas Cook’s airline businesses, including Thomas Cook Airline and Condor, have performed well recently, the 178-year-old company reported a 1.5 billion GBP pretax loss for the trailing six-month period.

Thomas Cook has been in talks to sell some of its airline operations and appeared to have secured a 300 million euro loan contingent on that sale, but on Friday external auditors for the airline raised serious concerns about that sale.

With the company’s stock rendered essentially worthless and major hedge funds positioning themselves to benefit from a debt restructuring, it’s likely we’ll see a sale of Thomas Cook and/or Condor sooner rather than later. Lufthansa confirmed it had submitted a bid for Condor, with the option to extend that to all of Thomas Cook Airlines. Virgin Atlantic is also reportedly involved in the bidding process.

So what would a takeover of Condor by Lufthansa or Virgin Atlantic look like? While it’s possible that they would continue to operate the airline separately, it seems much more likely that this is simply a distressed asset sale and we’d see Condor and/or Thomas Cook’s fleet, and more importantly landing slots, absorbed by the successful bidder. Lufthansa would certainly like to prevent any other airline from gaining a foothold in its Frankfurt hub where Condor is headquartered.

Thomas Cook operates a fleet of about 100 Airbus A321s and A330s while Condor operates a more diverse mix including 767s, 757s, A320s/A321s and A330s. While the short-haul jets would fit naturally into either Lufthansa or Virgin Atlantic’s operations, it would be interesting to see what they do with the 767s and 757s. Neither of the rumored bidders currently operates those airframes, and there is a real incentive against introducing a new type of plane and complicating scheduling and maintenance operations.

Bottom Line

If you have any upcoming travel booked on Condor or Thomas Cook Airlines, make sure to keep an eye on the news. This situation is deteriorating rapidly and Thomas Cook could likely be forced to sell one or both of its airlines in the near future in order to keep the rest of its operations running.

In the meantime, check out our guide on what to expect from your credit card issuer if an airline goes bankrupt.

For the latest travel news, deals and points and miles tips please subscribe to The Points Guy daily email newsletter.

Chase Sapphire Preferred® Card

WELCOME OFFER: 80,000 Points

TPG'S BONUS VALUATION*: $1,600

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 toward travel when you redeem through Chase Ultimate Rewards®.
  • 2X points on travel and dining at restaurants worldwide, eligible delivery services, takeout and dining out & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 80,000 points are worth $1,000 toward travel.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.
Intro APR on Purchases
N/A
Regular APR
15.99%-22.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.