Thomas Cook executives pin blame on government for its demise
Board members say UK’s failure to stand as security for rescue deal led to group’s collapse
Thomas Cook executives said that the failure of the UK government to stand as security for a rescue deal led to the travel company’s collapse in late September.
Group chairman Frank Meysman said on Tuesday that Thomas Cook’s lending banks and largest shareholder Fosun were in favour of agreeing a £900m recapitalisation of the company up until 4pm on the Sunday before it collapsed. But, he added, their support was conditional on additional security from the UK government, which it refused to give.
A committee led by Labour MP Rachel Reeves grilled five of Thomas Cook’s board members on the company’s debt levels, accounting practices and levels of executive pay.
Peter Fankhauser, chief executive of Thomas Cook, said that he “didn’t dare criticise the government” but that, on September 22, the day before the company collapsed, “we knew that we needed something that was strong because without it we knew we couldn’t take off again on Monday because the business was on its knees”.
He added that, had the recapitalisation plan been successful, Thomas Cook would have been one of the “best funded travel companies in Europe”.
The committee hearing started with questions on salaries and bonuses received by Thomas Cook executives. Board members received salaries totalling £20m in the five years before its collapse.
Mr Fankhauser defended his pay, saying that half of his £8m remuneration was given in shares, which he never sold and were now “nil and void”. He added that 30 per cent of a £750,000 bonus payment given in 2017 was awarded in shares.
He said that he had not received bonuses in 2018 and 2019 and did not receive a 2 per cent annual increase in pay this year.
When asked if he would consider returning some of his pay, Mr Fankhauser said: “I will consider what is right but I will not decide that today.”
According to Mr Fankhauser, the government did not step in to save Thomas Cook as it did not want to set a precedent.
Mr Meysman said he had tendered resignation to other boards that he sat on but that his offers had not been accepted.