Bosses at Thomas Cook pocketed a £47million pay bonanza as the firm headed for the rocks.
Last night, after the travel operator was dramatically declared bankrupt, furious customers demanded executives hand back some of their ‘rewards for failure’.
Boris Johnson also intervened, asking why directors had paid themselves large sums as the company went ‘down the tubes’.
Ministers have opened an investigation into how Thomas Cook sank under £1.6billion of debt.
Up to a million customers have seen their holidays thrown into chaos by the collapse of Thomas Cook. Many are unlikely to receive compensation (stock image)
Stranded tourists line up in front of the Thomas Cook counter at the Cancun airport in Mexico. Thomas Cook folded in the early hours of Monday morning putting 22,000 jobs at risk worldwide, including 9,000 in the UK and signalling the closure of more than 600 agency branches
Up to a million customers have seen their holidays thrown into chaos by the collapse of the 178-year-old firm. Many are unlikely to receive compensation.
The UK authorities yesterday began to fly home the first of the estimated 156,000 Britons stranded abroad. The operation – the country’s largest ever peacetime repatriation – will cost taxpayers an estimated £100million. Amid travel mayhem around the globe:
- Despairing holidaymakers had to barricade themselves in hotel rooms after staff threatened to throw them out unless they personally paid thousands of pounds owed by Thomas Cook;
- Others chose to flee their hotels after being hit with impromptu demands for huge bills they thought they had paid;
- There were long delays at airports as the Civil Aviation Authority began the first stage of the repatriation operation;
- Up to 500,000 Thomas Cook customers from other countries, mostly Germany and in Scandinavia, are also affected;
- Business Secretary Andrea Leadsom asked the Insolvency Service to launch an investigation into the role of management in the collapse;
- Rival airlines were accused by some customers of behaving like vultures by hiking their prices to cash in on desperate customers;
- City investors who bet against the firm were set for a £250million windfall;
- A row broke out over whether the Government should have intervened;
- Some selfless Thomas Cook staff turned out to help customers, even though they had no prospect of being paid.
Thomas Cook folded in the early hours of yesterday putting 22,000 jobs at risk worldwide, including 9,000 in the UK and signalling the closure of more than 600 agency branches.
Peter Fankhauser, the Swiss chief executive taken on in the immediate years before its collapse yesterday, has taken home £8.4millon since 2014
A Daily Mail audit yesterday revealed that the three chief executives who have led the beleaguered firm since 2007 raked in more than £36.1million in pay and bonuses.
Peter Fankhauser, the Swiss chief executive taken on in the immediate years before its collapse yesterday, has taken home £8.4millon since 2014, including £4.6million in bonus payments linked to performance.
His predecessor Harriet Green, who ran the firm between 2012 and 2014 and faced controversy over an £80,000 yearly hotel and travel bill, took home almost £11million in total pay. In 2015 alone, she received £6.3million despite only working for two months of that financial year.
The most controversial payments were received by Manny Fontenla-Novoa. The Spanish-British businessman’s huge pay packages totalling £16.8million led the company to introduce internal ‘clawback’ measures in 2012
The businesswoman ultimately donated a third of a £5.6million share award to charities picked by the parents of Bobby and Christi Shepherd, who died of carbon monoxide on a 2006 Thomas Cook holiday in Corfu.
The most controversial payments were received by Manny Fontenla-Novoa, who saw the company’s share price drastically tumble under his leadership between 2007 and 2011.
The Spanish-British businessman’s huge pay packages totalling £16.8million led the company to introduce internal ‘clawback’ measures in 2012 that could see exaggerated bonuses recouped.
Meanwhile, Thomas Cook’s former chief financial officer, Michael Healey, took home a total of £8.3million between 2012 and 2018 in salary and bonuses. And non-executive chairman Frank Meysman earned £2.2million in salary and benefits between 2018 and 2012, totalling almost £47 million for the five.
The Prime Minister intervened during an interview at the British consulate general’s residence in New York. He said: ‘I think the questions we’ve got to ask ourselves now: how can this thing be stopped from happening in the future?
Harriet Green, who ran the firm between 2012 and 2014 and faced controversy over an £80,000 yearly hotel and travel bill, took home almost £11million in total pay
‘How can we make sure that tour operators take proper precautions with their business models where you don’t end up with a situation where the taxpayer, the state, is having to step in and bring people home?
‘I have questions for one about whether it’s right that the directors, or whoever, the board, should pay themselves large sums when businesses can go down the tubes like that.’
In a letter to the Insolvency Service, Miss Leadsom ordered scrutiny of ‘whether any action by directors has caused detriment to creditors or to the pension schemes’.
A senior government source said Thomas Cook’s bosses had ‘legitimate questions to answer’ about their stewardship of the company.
Tom Patrick, 69, from Cookstown, Northern Ireland, who was on holiday with his wife Valerie, was one of the devastated customers.
‘They ripped the company apart but they’ll be home and dry while their employees suffer and thousands of holidays are ruined,’ he said. ‘They shouldn’t get a penny of a performance-related bonus, by definition. You can’t reward failure on this scale with millions of pounds, it’s ridiculous.’ Lesley Mance, 29, from Reading, said: ‘I am furious they were paid so much when they were completely incapable of keeping the company afloat or avoiding this mayhem.’
The assistant accountant was threatened with eviction from her hotel in Tenerife if she did not pay almost £1,000 in additional fees owed by Thomas Cook.
She said: ‘If executives had any decency they would return the money to the people who are suffering because of their incompetence.’
Thomas Cook cabin crew member Elizabeth Telford, 56, from Newcastle, accused Mr Fankhauser of being blind to changes in a travel industry confronted with more choice in the internet age.
Hopes of recourse however were dashed last night after legal experts said that it was highly unlikely that bonuses would be paid back because there was no suggestion of criminality.
It emerged last night that Thomas Cook had been forced to introduce internal rules to curb bonuses in 2012.
Rise to the top ended in chaos… and £17m in pay
Manny Fontenla-Novoa became chief executive in 2007 and was paid up to £850,000 a year
Manny Fontenla-Novoa joined Thomas Cook at the age of 18.
He rose to the top and presided over a disastrous period for the company that saw its share price tumble amid a series of profit warnings.
Investors were outraged when the 65-year-old, left, walked away with a massive bonus in 2011, taking his total pay over his five-year stint to £16.8million. The incident led to an overhaul of executive remuneration at the company. His parents had moved to Fulham in west London with him and his siblings after the family firm in their native Galicia, Spain, went bust. He described the period as ‘really sad, really traumatic’.
He had become chief executive in 2007 and was paid up to £850,000 a year. He was awarded performance bonuses of £11.6million. In 2017, he and his wife Lesley sold their sprawling country mansion in Surrey for £4million.
Harriet Green was Thomas Cook’s chief executive between 2011 and 2015
£7.9m bonuses of yoga queen once called ‘shameless’
Harriet Green was Thomas Cook’s chief executive between 2011 and 2015.
A yoga devotee, she became known in City circles for a relentless work ethic that saw her sleep three hours a night and wake up at 5am for tough gym sessions run by a former Marine. She referred to herself as a ‘landa’, a creature combining the fierce qualities of a lion and the placid nature of a panda.
Her time at the company was marred by a series of controversies over the inquest of Christi and Bobby Shepherd, aged six and seven, who died while on holiday in Corfu in 2006.
She was labelled a ‘greedy, shameless woman’ over her handling of the crisis. She agreed to pay a third of a £5.6million bonus to charities chosen by the children’s parents. She was on a salary of up to £687,000 a year and was given £7.9million in bonuses.
£8m aerobics instructor
Peter Fankhauser has been chief executive at Thomas Cook since 2015 during which time he has pocketed an annual salary of up to £725,000.
With his bonuses of £4.6million he took more than £8milion out of the failed company.
The former aerobics instructor, main picture, went into travel when his father stopped him from becoming a fighter pilot following a period of service in the Swiss army’s tank division.
The married father of three failed to turn around a business that was already in financial straits when he took over.
He was lauded for meeting the parents of Christi and Bobby Shepherd, aged six and seven, who died while on a Thomas Cook holiday in Corfu in 2006. His decision came against the advice of lawyers.
As part of his efforts to make amends for his company’s ten-year refusal to apologise to the Corfu children’s parents he set up a charity, the Safer Tourism Foundation, with their mother Sharon Wood.
The keen runner and skier, whose plodding tone has been compared to Arnold Schwarzenegger’s character in Terminator, once said the company had to ‘walk in its customers’ flip-flops’.
He rents an opulent £2million Surrey mansion for £6,000 a month where he lives with his wife Raffaella Cassani.
Frank Meysman became chairman in 2011 and has been paid £275,000 a year
£275k-a-year Belgian who wanted to leave
Frank Meysman became chairman in 2011 and has been paid £275,000 a year.
The 67-year-old Belgian, pictured below, has previously worked in marketing for Bounty and Ariel owner Procter & Gamble.
In summer last year it was reported the veteran had been looking to leave Thomas Cook but a replacement had not been found.
In December last year, even as the company was apprently seeking to replace him, Mr Meysman sunk £159,000 of his own money into Thomas Cook shares.
Michael Healey was chief financial officer from 2012 to 2017.
Accountant tots up £4.6m in rewards
An accountant by training, Michael Healey was chief financial officer from 2012 to 2017.
Over this period he was paid £2.8million in salary and picked up performance bonuses of £4.6milion.
The former Kwik-Fit finance director, left, owns a £1.35million apartment in Chelsea, and recently sold a home in Edinburgh for £1.2million.
The 69-year-old worked for a Hong Kong firm as well as the travel company ebookers before joining Thomas Cook.
Staff turn up to help AFTER firm goes bust
Heroic Thomas Cook staff went to work to help holidaymakers yesterday, despite losing their jobs and any prospect of being paid.
Workers stood outside closed branches to assist customers, while reps at resorts across Europe helped families rebook flights home.
Among them was customer service worker Lucy Beatrice, 23, who turned up at her shop in Birmingham yesterday.
She tweeted: ‘Officially unemployed. Devastated beyond words. Even after us ceasing trading, I will be at my branch at 9am to help my customers with any questions.’
Another staff member, Emma, said: ‘I’m in resort today and have so much respect for our rep who came in to help customers even though technically she has no job and no way home herself.’
One man said his girlfriend, a Thomas Cook flight attendant at Newcastle Airport, had ‘looked after passengers last night knowing she was not getting paid’. Meanwhile, there were emotional scenes as passengers on Thomas Cook’s final flights arranged whip-rounds for cabin crew.
Flight attendants aboard the operator’s last flight, an Airbus A330 from Orlando to Manchester, burst into tears when they were presented with carrier bags stuffed with cash.
… as vulture hedge funds cash in
Vulture hedge funds are in line to reap more than £200 million from the company’s collapse.
As thousands of Thomas Cook staff lost their jobs, financial speculators who snapped up the firm’s debts are set to profit. This is because they took out so-called credit default swaps, which act as insurance policies that pay out when a debtor cannot meet repayments or goes bust.
Hedge funds who were betting against Thomas Cook include Sona Asset Management and XAIA Investment GmbH. They could make as much as £201 million, Bloomberg reported. The Mail revealed yesterday that a horde of speculators had also been betting Thomas Cook’s share price will fall for months – meaning they will also get a payout.
It comes amid anger over the Government’s refusal to save the firm with a £250 million rescue deal.
Manuel Cortes, of the Transport Salaried Staffs’ Association, said: ‘The Prime Minister talks about morality but his immoral chums in the City are now making shedloads of cash on the backs of 9,000 job losses and 150,000 holidaymakers stranded abroad.’
Britons held to ransom: Holidaymakers are told to pay thousands of Euros or get out by hotels seeking their money back after Thomas Cook’s collapse
British holidaymakers last night told of being held ‘hostage’ in their hotels after staff threatened them with eviction unless they pay thousands of euros following the collapse of Thomas Cook.
Stephen McGonnell and Stacey Robinson, whose nine-month-old daughter Olivia is sick with a chest infection, were among dozens of tourists handed handwritten bills at the Hotel Troya in Tenerife
Stephen McGonnell and Stacey Robinson, whose nine-month-old daughter Olivia is sick with a chest infection, were among dozens of tourists handed handwritten bills at the Hotel Troya in Tenerife.
Staff at the all-inclusive resort yesterday demanded the couple pay an additional 1,038 euros (£917) on top of the £1,500 they paid Thomas Cook for their ten-day stay.
Miss Robinson, 28, a recruitment consultant from Bolton, said: ‘The manager just wrote the figure on a piece of paper, slid it over to me, smirking, and said “pay or you’re out”.
‘I said we’ve paid for this trip already and we have a sick baby, this is ridiculous. So now we are frightened to leave the room empty in case they come up and remove all our stuff. We’ve been given contradictory advice from ATOL, who we have been ringing all day – sometimes they say pay it and other times they say don’t.
‘We don’t know what to do because what if we pay and can’t get it back? So now we’re prisoners in our hotel with a sick baby.’
Yesterday, Britons started to fly home on planes chartered by the Civil Aviation Authority. The £100m operation was beset by delays at many resort airports including Palma in Majorca. Some stranded guests complained of nine-hour delays.
Meanwhile another guest threatened with eviction at the Tenerife hotel was single mother Jodie McDade, 30, who paid £900 with her daughter Kara but was told she would have to pay an extra 451 euros (£398) or face being removed. ‘My sister spoke with CAA for me and they advised to pay the money as it was that or leave,’ the prison warden said.
Single mother Jodie McDade, 30, paid £900 with her daughter Kara but was told she would have to pay an extra 451 euros (£398) or face being removed
Hotel staff remained unapologetic, claiming they had not recovered money from Atol following the Monarch Airlines collapse in 2017.
Thomas Cook cabin crew member Elizabeth Telford, 56, from Newcastle, staying at the hotel with her husband Andrew, 59, suffered a ‘devastating double-whammy’, losing her job as the firm collapsed and being threatened with eviction from the hotel unless the couple paid an extra 661 euros (£584).
‘I have worked for Thomas Cook for ten years and I loved it,’ the grandmother-of-three said. ‘I got an email in the morning saying they were really sorry, but the company has gone under and here is your P45. It said I would find out later about any money they owed me and I still have no idea about my pension.
‘So I lost my job, which was completely devastating in itself, then we get a note under our door from the hotel saying contact reception immediately. We came downstairs and the receptionist just slid a bit of paper with the figure of 661 euros written on it and demanded we pay it or we would be kicked out of the hotel.’
The hotel’s reception manager, who identified himself only as John, said: ‘We are waiting for Atol to confirm to us they will cover everything. But when Monarch collapsed the hotel didn’t get anything from Atol, so this time we are being more careful.
‘Some guests have paid, and will be able to claim it back. The ones who don’t will have to leave.’
The situation was similar for Thomas Cook holidaymakers in Ibiza, where Richard and Sue Moore, from Birmingham, were forced to ‘do a runner’ from their hotel when they were asked to pay extra. The couple booked a holiday to the Mar Y Huerta hotel through the beleaguered travel operator and were scheduled to fly home last night. However when they came to check out of their hotel yesterday morning, the Moores, who paid £1,400 for their 11-night holiday, were told: ‘You will have to pay more because we won’t get our money from Thomas Cook.’
Mr Moore, 69, a retired mechanical clerk, added: ‘We just wanted to get out of there because the longer we were there, the more hostile it would have become. We’ve basically legged it.
‘I’ve never done anything like that in my life. We’ve done a runner from the hotel. We haven’t done anything wrong as we paid in advance.’
Thomas Cook cabin crew member Elizabeth Telford, 56, from Newcastle, staying at the hotel with her husband Andrew, 59, suffered a ‘devastating double-whammy’, losing her job as the firm collapsed and being threatened with eviction from the hotel
The couple’s terrifying plight emerged as the Government kickstarted Operation Matterhorn, a £100million effort to bring back 156,884 Thomas Cook customers stranded in 52 resorts.
Yesterday an estimated 14,000 travellers were flown back to the UK using a fleet of 62 aircraft borrowed from airlines from as far afield as Florida, Malaysia and Africa.
The fleet is assembled from airlines as diverse as Miami Air, Egypt Air and Malaysia Airlines, and includes everything from short-haul Airbus A320s to colossal A380 double-deckers and Boeing 747 jumbo jets.
A further 2,000 passengers who were due to fly back yesterday will return today, according to the CAA, which is masterminding the mass airlift – Britain’s biggest repatriation effort since the Second World War.
An army of hi-vis-jacketed ATOL and Foreign Office staff were deployed to meet holidaymakers, and a dedicated website set up to give details of flights.
Although most holidaymakers originally due to fly home yesterday were returned, some have been forced to wait until today and some flights were delayed. Others are being flown to different airports than those they set off from.
‘It’s heart breaking’: Thomas Cook customers tell of their despair after their holidays were wrecked, including a trip of a lifetime for a boy, seven, who had just recovered from liver cancer
By Hannah Dawson, Mariaelena Agostini and Alec Fullerton
While 156,000 tourists were left stranded abroad last night after Thomas Cook’s sudden collapse, up to a million customers faced heartache at home as trips of a lifetime were cancelled.
They have paid for holidays and planned them for months only to see their dreams in tatters.
As the massive two-week operation to repatriate UK tourists got under way, families told how their plans were in chaos and they were uncertain when they would get refunds.
Disney heartache for boy who beat illness
Seven-year-old Connor Kitching’s trip to Disney in Florida with his family was supposed to be a well-earned reward for his bravery after beating cancer
Seven-year-old Connor Kitching’s trip to Disney in Florida with his family was supposed to be a well-earned reward for his bravery after beating cancer.
His mother Katie Butler, 26, and father Stephen Kitching, 28, had planned the trip of a lifetime for Connor, who was diagnosed with liver cancer in April 2017, and his brother Charlie, six.
They had spent around £6,500 on the holiday after a fundraising campaign was set up in their home area of Yiewsley in west London. The family were due to jet off next week but now their plans have been dashed.
Miss Butler said she is ‘absolutely gutted’ at the news of Cook’s collapse. She added: ‘A lot of people in our community raised money in order for us to make this trip. It would have been our escape after a really bad time for all of us.’
She stressed that telling the kids, especially Connor, was ‘absolutely heart-breaking’. Connor was diagnosed with a tumour on his liver and underwent chemotherapy at Great Ormond Street Hospital until June this year when he was declared cancer-free. The family said they will now ask for a refund and plan a new holiday.
45 wedding guests stranded at airport
Lindsay Coupe (second from the right), 37, and Lee Bramhall (left), 42, were set to fly out yesterday morning for their wedding
A wedding party of 45 people were left stranded at Manchester airport after their Thomas Cook flight to Jamaica was cancelled.
Lindsay Coupe, 37, and Lee Bramhall, 42, were set to fly out yesterday morning ahead of the ceremony on Saturday. As well as missing out on the wedding of a lifetime, the couple fear they will lose tens of thousands of pounds if the trip falls through. Miss Coupe, from Sheffield, said: ‘I am absolutely gutted. You spend all that time planning and looking forward to your wedding day. I can’t believe this has happened. I had a really big cry earlier because it all got too much.
‘I know that won’t help the situation so I’ve got myself together and am now just praying we get some good news.’
Honeymoon in the Maldives is lost
Lewis Bromiley and his wife Amy, who got married in August, were supposed to be travelling to the ‘paradise’ of the Maldives for their honeymoon.
They said now they expect to wait months for a refund on their £7,000 trip. Mr Bromiley, a 25-year-old insurance worker from Manchester, said: ‘We booked it over a year ago so we were well-prepared and had got the best deal. Me and my wife are devastated. We wanted to go to Maldives as it’s paradise. We’re looking to plan for children soon so we wanted to tick it off our bucket list before we couldn’t.’ Mr Bromiley criticised the way the situation had been handled, adding it was ‘poorly communicated’.
Lewis Bromiley and his wife Amy, who got married in August, were supposed to be travelling to the ‘paradise’ of the Maldives for their honeymoon
Anguish over trip for terminally-ill man
While some travellers were facing the loss of their first holiday together, for others it was potentially their last. Matt Dominic, 43, was given only six months to live when he received a terminal brain cancer diagnosis in May 2018. Well-wishers raised £1,800 to fly the former Rolls-Royce worker and his wife Lyndsay, 42, to Tenerife today for a week in the sun – possibly their last trip away together. Now Mrs Dominic fears there will not be enough time to arrange another holiday.
She said: ‘It’s not possible for us to book another holiday unless we get our money back. And I keep reading that it could take up to two months to get refunded.’
Mrs Dominic, of Allestree, Derby, said the two phone numbers she has for Thomas Cook are only playing a recorded message and she cannot get through to anyone at the Civil Aviation Authority. She insisted: ‘I would appreciate being prioritised especially under the circumstances. I don’t blame the Thomas Cook staff at all. It’s not their fault. They were kept in the dark as well. I really felt for them. The bosses are a different matter. They’re all in it for themselves.’
Mrs Dominic said she and her husband, 43, were ‘gutted’. She stressed: ‘He was really looking forward to it.’
£80,000 marriage plans in tatters
Laura Thorne, 32, and Lee Grant, 43, from Swindon, Wiltshire, were left unsure whether their dream wedding in Cyprus would go ahead after two years of planning.
The couple had arranged for 61 guests to fly out for the ceremony, paying a total of £80,000 to Thomas Cook. Miss Thorne told The Sun: ‘I just think it’s impossible to re-plan a whole wedding in a week. We might have to do a holiday in Cyprus instead. I can’t believe it. It’s so stressful.’
Thomas Cook Q&A: What should I do if I’m abroad and trying to get home or my hotel asks for more money?
Who is affected?
More than 150,000 Thomas Cook customers are currently on holiday abroad and need to be brought home. A further million customers have booked a trip for a future date and could lose out.
What should I do if I’m abroad?
The Government and Civil Aviation Authority have organised more than 40 aircraft to bring home stranded customers. They have agreed to repatriate any travellers scheduled to return home in the next two weeks if their journey started in the UK. Those due to travel back after October 6 will have to arrange their own transport home.
More than 150,000 Thomas Cook customers are currently on holiday abroad and need to be brought home (stock image)
Will I have to pay for a new flight?
Those with return flights home between September 23 and October 6 will be flown back for free. For customers returning home after this date, it will depend on the type of holiday they have booked. Customers who booked an Atol-protected package holiday where the flight, accommodation or transport such as a hire car or airport transfers are included in one price, will be reimbursed. Customers should have received an Atol certificate at the time of booking their trip. Those who booked flights and accommodation separately are typically not covered.
Where should I go for information? The CAA has set up a dedicated website thomascook.caa.co.uk. Customers can also call 01753 330330 if they are overseas or 0300 303 2800 from the UK.
What should I do if my hotel asks for more money?
The CAA said it will negotiate directly with the hotel if customers are on an Atol-protected package holiday with Thomas Cook or a company that is part of the Thomas Cook Group. If the hotel requests more money, call the CAA and do not make a payment unless instructed. Anyone who incurs additional expenses overseas will be able to make a claim directly to the CAA from Monday, September 30, when it starts to process refunds. Those who are not Atol protected may have to pay and claim the money back from their insurer, bank or credit card company.
What if I have an upcoming booking?
All holidays from yesterday onwards are cancelled, so travellers should not turn up at the airport. Customers with Atol-protected holidays can claim a refund. Package holidays without a flight are covered by British travel association ABTA. Passengers who are not covered by either of these schemes should contact their bank or credit card issuer for advice. Those who paid on a credit card may be entitled to a refund under Section 75 of the Consumer Credit Act. Those who paid on debit card can request a refund from their bank under so-called chargeback rules, although this is not guaranteed.
All holidays from yesterday onwards are cancelled, so travellers should not turn up at the airport (stock image)
What if I paid by direct debit?
The Direct Debit Guarantee does not apply to payments taken by a company which later collapses, so customers should cancel the direct debit to ensure that no more money is taken from their account. Travellers should be reimbursed if the holiday is Atol protected.
Will my travel insurance pay out?
Only around half of travel insurance policies cover what is known as end supplier failure. So unless customers have paid extra for a premium policy, it’s unlikely they will receive a payout.
RUTH SUNDERLAND: Thomas Cook was betrayed by myopic managers who failed to travel with the times
Peter Fankhauser, the Swiss chief executive of Thomas Cook, once told me his motto is that he ‘walks in the customers’ flip-flops’.
Perhaps the catchphrase, delivered in his heavily-accented English, loses something in translation.
It certainly rings hollow now that the 178-year-old travel firm has been flattened by an avalanche of debt – all the more so, given that it has been selling its holidays to those very customers right up to the eve of its collapse.
Rather than enjoying balmy, care-free days with the sand between their toes at the beach, around 150,000 of them are now stranded abroad.
Many more fear they will lose out on family holidays, dream weddings or retirement trips of a lifetime.
Fankhauser is no doubt chastened by the downfall of Britain’s best-known travel agent on his watch.
But walking in those customers’ flip-flops? Fat chance.
Fankhauser is no doubt chastened by the downfall of Britain’s best-known travel agent on his watch, writes RUTH SUNDERLAND (stock image)
Unlike the ordinary holidaymakers who have had to scrimp for their hard-earned annual fortnight in the sun, he is cushioned by the millions of pounds of pay and bonuses he has made in his short and far from distinguished reign.
His abject failure to restore the firm’s fortunes has not stopped him making a tidy fortune of his own.
More than £8 million in just four years, to be precise, at a firm that has gone bust.
It would be wrong to suggest he should shoulder the blame entirely for Thomas Cook’s decline and fall.
The company has fallen prey to all manner of mishaps, including high fuel prices, the drop in the value of the pound after the Brexit referendum, terror attacks and even hot summers that have encouraged people to stay at home.
An old poster advertising some of the different tours offered by Thomas Cook travel agents
But its real problems can be summed up quite simply: debt and mismanagement.
Customers and staff have been serially betrayed by a string of egocentric and overpaid bosses who were long on hubris but short on any strategy to drag the business into the 21st century.
True, its sun, sea and sangria package holidays and its network of old-school travel shops still have their devotees.
But it is a business model that looks increasingly anachronistic as customers take to the internet to book their own flights and hotels.
Online travel agent On The Beach, for instance, was founded just 15 years ago and now has a stock market value of around £500 million, while shares in Thomas Cook are worth a big fat nothing.
Fankhauser tried to fight the online tide by opening boutique hotels at modest room rates, but that has not been nearly enough to stop the rot. Nor did it help that he has been trying to revamp the business while being weighed down by vast borrowings.
By the time it fell into liquidation yesterday, Thomas Cook was £1.6 billion in the red. The enormous interest bills meant there was too little cash to invest in competing with nimbler, cheaper rivals.
The long, slow collapse of the travel agent – founded in the reign of Queen Victoria by the eponymous Thomas Cook – is one that lays bare the greed and myopia of modern corporate Britain.
The original Mr Thomas Cook, the forefather of modern tourism, was a teetotaller who would have been horrified at the antics of sunburned, drunken Brits abroad, as well as the fate of the business he began.
The firm’s current troubles can be traced back a number of years to the tenure of a previous chief executive, Manny Fontenla-Novoa, who masterminded a series of deals aimed at combating online competitors.
The trouble is, it didn’t work.
A big merger with rival firm MyTravel a dozen years ago failed to deliver the rich profits that had been anticipated. Quite the opposite: in May this year Thomas Cook wrote off more than £1 billion relating to the deal.
Another merger from that era seemed singularly ill-considered.
A deal with the Co-op’s holiday business was struck to create the biggest chain of travel shops in the country, at a time when it should have been abundantly obvious that bricks and mortar agencies were under threat from the internet.
None of this stopped the former chief from being paid many millions, including a £1.2 million payoff when he was ousted in 2011 just weeks before a £200 million rescue deal had to be organised with the company’s banks.
That time, Thomas Cook lived to fight another day, but it was left with a huge burden of debt as a result, for which it is still paying the price.
In 2012, it hired a new chief executive, Harriet Green, a hardcore boss who boasted about her 5.30am workouts with an ex-Marine personal trainer in a posh London hotel, where she lived for four nights a week at company expense.
She described her management style as a ‘landa’ – a mix between a lion and a panda – which raised eyebrows but seemed to work as the business became more financially stable by the time she left in 2014.
Needless to say, she too pocketed multi-million pound rewards, though the recovery she instigated soon began to unravel.
In addition to the financial struggles, a terrible human tragedy was also playing out in the shape of the shameful corporate response to the deaths of seven-year-old Christi Shepherd and her brother Bobby, six.
The siblings died from carbon monoxide poisoning on a Thomas Cook holiday in 2006.
For almost a decade the company refused to accept responsibility and managers even accepted a compensation payment of £3 million from the owner of the hotel.
Green – who is now in a lucrative senior post at US computer giant IBM – was chief executive at the time of the inquest into the children’s deaths.
Thomas Cook folded in the early hours of Monday morning putting 22,000 jobs at risk worldwide, including 9,000 in the UK and signalling the closure of more than 600 agency branches (stock image)
When Fankhauser took over, he finally apologised to the family and confessed he was ‘ashamed’ of the heartless way the business had behaved.
By that point, however, a great deal of damage had already been done.
It was a dark episode in the annals of the company, and one that showed how badly it had lost its way morally as well as financially.
Sad though it is to see such a venerable firm in such a plight, it does not merit a state bailout. Without wanting to underestimate holidaymakers’ distress, the fact is that Thomas Cook is not integral to the functioning of the entire economy, as the bust banks were in the financial crisis.
Customers should be compensated, but in a capitalist system not every company can be rescued. If industrial groups such as British Steel or Sirius Minerals are not given a helping hand by HM Government, it is hard to see why a tour operator should be. And, tempting though it may be to try to blame RBS for refusing to extend the cash needed to continue, the reality is Thomas Cook is the author of its own misfortunes.
The most likely outcome is that parts of the business, possibly including the Thomas Cook name, will live on in a diminished form after the firm has been sold off piecemeal.
The only winners will be predators who pick up assets on the cheap, along with the City short-selling vultures who have been betting on the firm’s demise – and, of course, the bosses who have received such rich rewards for failure.