Letter to BS: Thomas Cook collapse is a big blow to global tourism

Photo: Bloomberg
This refers to “Thomas Cook goes bust, fliers stranded” (September 23). This is a typical case of overconfidence and mismanagement by a company. Thomas Cook was a well-established company that had, over the years, captured the confidence of the global market. Today's markets are highly competitive and survival is the only thing that matters and not past reputation. Therefore, companies should first review their own capabilities before thinking of mergers and acquisitions. Increased market indebtedness will erode shareholder confidence and lead to flight of capital. Liquidity erosion does not occur overnight and in retrospect, Thomas Cook should have restricted its scope of activities to put its finances in order. Continuing to tread on its old path led not only to revenue loss but also to capital erosion. The declaration of bankruptcy has created a systemic problem. The collapse has impacted not only the global tourism sector but also the hotel industry and the foreign exchange business. Retail trade is also short of revenue and travel agents have shut shop. The only positive is the benefit to other competitive firms and brands.

C Gopinath Nair  Kochi

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