Thomas Cook & CAA

[robbelg]

DAK why the CAA is chartering lots of aircraft instead of using Thomas Cooks planes and crews?

Rob

[PinkDalek]

DAK why the CAA is chartering lots of aircraft instead of using Thomas Cooks planes and crews?

Would not the Thomas Cook leased aircraft be under the control of the liquidators and not available to the CAA?

[stewamax]

Would not the Thomas Cook leased aircraft be under the control of the liquidators and not available to the CAA?

True. But I would have thought it incumbent on the liquidators to squeeze every drop of value out for the benefit of creditors.
Perhaps the question should be why the liquidators themselves aren't re-leasing the aircraft to the CAA

[UncleIan]

DAK why the CAA is chartering lots of aircraft instead of using Thomas Cooks planes and crews?

Perhaps the airline owed a load of money to the airports for their slots, so the liquidators can't re-lease the TC planes as the airports won't want the handy collateral of an actual plane set against what they're owed to just fly off into the sunset.

[PinkDalek]

Perhaps the question should be why the liquidators themselves aren't re-leasing the aircraft to the CAA

Wouldn't they need to seek the permission of the aircraft owners to sub-lease or whatever term it would be?

Carcosa has summarised the position in so far as Avation (AVAP) are concerned here (two are leased from them) and suggests any such action would take some weeks:

viewtopic.php?p=253197#p253197

... All but five of the aircraft fleet are leased from a total of 38 leasing companies or investment vehicles, including Avation which has two A321's in the Thomas Cook fleet. ...

Two of the affected aircraft are leased from Avation (MSN 7003 & MSN 7055) and are both 3.5 years old making them essentially amongst the youngest in the Thomas Cook Airlines fleet.

Presumably the Administrator will have to decide what happens next, and that will undoubtedly take several weeks during which time I would presume Avation have/will be canvassing for new homes for these aircraft. ...

Edit: Carcosa's follow up post included this from an RNS issued by Avation:

... Avation has issued default notices and will as quickly as possible repossess the two aircraft along with their aircraft records. The Company has a remarketing plan and intends to remarket the aircraft in the ordinary course of business ...

[SteelCamel]

Thomas Cook is in liquidation, which doesn't allow them to keep trading. The staff are gone - there's no-one to fly the planes, and no-one to maintain them. The ground facilities are closed, and probably reverted back to the landlords. To use the planes, the CAA would effectively be starting an airline from scratch. Or they could hire charter planes, which are there to be hired with everything needed already available - hand over money, there's your flight, no hassle.

[monabri]

Maybe a darker reason? Do you want to fly home with a pilot who has just been advised that they no longer have a job? It might figure somewhere in the reasons?

[Lootman]

Thomas Cook is in liquidation, which doesn't allow them to keep trading. The staff are gone - there's no-one to fly the planes, and no-one to maintain them. The ground facilities are closed, and probably reverted back to the landlords. To use the planes, the CAA would effectively be starting an airline from scratch. Or they could hire charter planes, which are there to be hired with everything needed already available - hand over money, there's your flight, no hassle.

I've always thought that the US provisions for corporate bankruptcy, known as Chapter 11 of the US bankruptcy code, work better because they allow the entity to continue operating while the administration process continues. In fact a good number of US airlines have gone bankrupt, including Pan Am, TWA, Continental, Frontier, Eastern, US Air, United and Northwest. In each case they continued operating and then were successfully merged into other airlines, except for United which endures to this day.

[bionichamster]

DAK why the CAA is chartering lots of aircraft instead of using Thomas Cooks planes and crews?

Perhaps the airline owed a load of money to the airports for their slots, so the liquidators can't re-lease the TC planes as the airports won't want the handy collateral of an actual plane set against what they're owed to just fly off into the sunset.

Indeed, On the Scottish news last night they stated that TC planes at Glasgow airport had been impounded pending payments.

Landing fees apparently : https://www.thesun.co.uk/news/9999127/thomas-cook-planes-seized-glasgow-debts/is

Bh

[gryffron]

I've always thought that the US provisions for corporate bankruptcy, known as Chapter 11 of the US bankruptcy code, work better because they allow the entity to continue operating while the administration process continues. In fact a good number of US airlines have gone bankrupt, including Pan Am, TWA, Continental, Frontier, Eastern, US Air, United and Northwest. In each case they continued operating and then were successfully merged into other airlines, except for United which endures to this day.

So does the UK's, in theory. Administrators can continue to operate the business and sell it as a going concern. However, I believe in this case the administrators took one look at the books and decided there was no hope of a rescue.

IIRC at one time in history EVERY US airline was operating under Chapter 11. The US system can be very damaging to suppliers who are obliged to keep supplying customers operating under ch11. Sometimes the US system works. Sometimes it causes much wider collateral damage.

I believe the airline operators license belongs to Thomas Cook, so the CAA cannot operate their planes even if they wanted to. Do TC own them anyway? Many airliners are leased, especially by smaller airlines.

Do you want to fly home with a pilot who has just been advised that they no longer have a job?

Several reports in the news that they did. But the flight crews need to get home too!

Gryff

[Dod101]

Someone who knows about these things will tell us I am sure, but if a company goes into administration it usually continues operating with the administrators in charge. They will try to sell all or parts of the business as a going concern. The directors are not allowed to continue operating the business if it is insolvent even if it has some cash to use as working capital because obviously that prejudices the creditors.

Clearly if the company has no money (like Thomas Cook and the infamous Carillion) it cannot operate and then it will be put in to liquidation immediately. That is the end and it is simply a matter of trying to sell the assets for what they can get, normally a much poorer outcome for those owed money. I suppose that is not to say bits cannot be sold as a business proposition but it cannot be as a going concern, because not only will the company be insolvent but it has no working capital and thus cannot operate.

That is how I understand it anyway.

Dod

[Alaric]

if a company goes into administration it usually continues operating with the administrators in charge. They will try to sell all or parts of the business as a going concern.

A piece of speculation from the FT (found with a Google search for Thomas Cook bonds)

The interesting question is what credit default swap investors get because there is a theory which is abroad at the city this morning that what happened here was that investors in credit default swaps, which pay out when a business can no longer meet its loan or bonds obligations, may have encouraged this collapse and also nudged it in the direction of an insolvency rather than an administration. That could be a very politically explosive conclusion, if it's correct.

A potential rescue may have involved a loan to equity swap. This isn't good for shareholders because of the dilution and isn't going to happen if bondholders and lenders veto it as well.

[didds]

Do you want to fly home with a pilot who has just been advised that they no longer have a job?

ON a far more prosaic level I noticed that the TC shop in our town had A4 printed notices in the windows saying that the shop was closed as of immediate notice etc. So in a similar manner presumably the office manager (or someone anyway) had, with all knowledge that they no longer had a job, gone in to print off the notices and stick them in the windows.

didds

[Dod101]

Do you want to fly home with a pilot who has just been advised that they no longer have a job?

ON a far more prosaic level I noticed that the TC shop in our town had A4 printed notices in the windows saying that the shop was closed as of immediate notice etc. So in a similar manner presumably the office manager (or someone anyway) had, with all knowledge that they no longer had a job, gone in to print off the notices and stick them in the windows.

didds

I would imagine that that would have been instructed by the liquidators and they would have paid someone to put it in that and all other TC shops. I do not think that the office manager was doing it (if 'twas he) as a good thoughtful ex employee.

Dod

[Lootman]

the CAA cannot operate their planes even if they wanted to. Do TC own them anyway? Many airliners are leased, especially by smaller airlines.

TC owned only five of their planes. The rest were all leased.

Interestingly one plane now going back to the lessor had been acquired when Monarch Air collapsed.