Why did Thomas cook company collapse

But it was insurmountable debt that sealed Thomas Cook’s fate in the end. The company failed to clear a debt burden of £1.1 billion that had almost destroyed it back in 2011. Several ill-advised deals, especially its 2007 merger with MyTravel Group

a company that had achieved a profit only once in the previous six years

saddled the group with excessive debt. And despite raising £425 billion from shareholders in 2013, this ultimately proved insufficient in pulling the company out of the red, with vast sums of money being paid out just to service outstanding debt. Indeed, £1.2 billion was paid in interest alone from 2011 onwards. And by the end, it had racked up debts of £1.7 billion, meaning that it needed to sell three million holidays a year just to cover its interest payments. Reports of company mismanagement at the top, as well as a ceasing of dividend payments

and a decidedly odd timing of their resumption

raised further red flags of Thomas Cook’s deteriorating health.

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