Thomas Cook Group Plc collapsed under a pile of debt after talks with creditors failed, forcing the British government to hire charter planes to bring thousands of the 178-year-old travel company’s customers back home.

The company filed for administration early Monday after eleventh-hour negotiations to raise additional funding failed to result in a deal. The move saw all bookings, flights and holidays with Thomas Cook cancelled, sparking panic online among travellers. In what it called the largest repatriation in peacetime history, the government said it would work to return all those booked to come back to the UK over the next two weeks free of cost.

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The collapse spells the demise of what is one of the the UK’s best-known brands, and caps months of talks with Thomas Cooks investors, led by Fosun Tourism Group. The Chinese firm, which owns the Club Med resort chain, proposed a $1.1 billion bailout in exchange for control of London-based Thomas Cooks tour operations and a minority stake in its airline. Last week, the tour operator said it needed 200 million pounds ($250 million) more, leading to the rapid unravelling of its rescue prospects.

Although a deal had been largely agreed, an additional facility requested in the last few days of negotiations presented a challenge that ultimately proved insurmountable, said Chief Executive Officer Peter Fankhauser.

The company is one of the most high-profile casualties of the travel business decades-long shift online and the malaise affecting the European holiday market. For decades, tour operators such Thomas Cook and Germany’s TUI AG thrived by offering package holidays to sun-starved Europeans. But the rise of discount airlines and web distribution have squeezed profits in an industry that is highly seasonal and prone to shocks from terrorism to political turmoil.

Travellers on Thomas Cook vacation packages and flights were advised by the British government not to cut short their trips, with the civil aviation regulator planning to repatriate customers as close as possible to their booked return date. The government will also cover the cost of accommodation for Thomas Cook customers.

The collapse deals another blow to the European travel sector, just months after the bankruptcy of Icelandic budget airline, Wow Air. The carrier shut down its operations in March due to lack of financing, leaving 2,700 fliers stranded and hurting the country’s economy.

Thomas Cook filed for administration early on Monday at the High Court in London. AlixPartners LLP was named an adviser and will work with the aviation authority to bring customers back to the UK. Fosun Tourism Group said in a statement on Monday that it was disappointed Thomas Cook was unable to find a solution. Fosun confirms that its position remained unchanged throughout the process, but unfortunately other factors have changed, the company said. We extend our deepest sympathy to all those affected.

Hedge funds

Shares of Fosun Tourism Group dropped as much as 5.5 per cent in Hong Kong on Monday before paring losses. They were down 2.8 per cent as of 11:49 am local time.

The last-ditch rescue bid proposed swapping existing debt into shares, leaving Fosun holding the majority of Thomas Cooks tour-operating business while creditors would have controlled its airlines. The company had debt of almost 2 billion pounds as of March 31, according to data compiled by Bloomberg .

But the challenges eventually proved insurmountable. A group of hedge funds began to organise to block the plan because it would stop them from cashing in on holdings of credit-default swaps that pay out when a company defaults. There was also concern customers would stop buying vacations and flights from Thomas Cook for fear the company wouldn’t be around to honour their bookings.

The UK government pushed back Sunday against suggestions it should step in to rescue the company, with Foreign Secretary Dominic Raab saying there was no strategic national interest for doing so.

Victorian roots

Founded in the 1840s by a Victorian entrepreneur of the same name, Thomas Cook started out by running train trips through the English Midlands. The business expanded as Britain’s growing middle class discovered they had more time -- and money -- to discover the delights of Europe.

Briefly absorbed into the state rail company soon after World War II, the company got its biggest boost in the 1970s and 1980s as Britons sought the sun on a cheap budget. The ad slogan Don’t just book it, Thomas Cook it entered the national psyche.

But Thomas Cook laboured under its large debt burden and the costs associated with maintaining a high-profile presence in Britain’s provincial towns. Nimbler online rivals ate into the company’s core business and a succession of turnaround plans failed to stick, while the sluggish European vacation market and uncertainty over the economic impact of Brexit also more recently crimped demand.

The company, with more than 500 locations nationwide, generated cash flow-per-employee of just 188 pounds last year. This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world, CEO Fankhauser said on Monday.

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