Yahoo Finance MP blasts 'deluded' Thomas Cook management over company's collapse
The former management of Thomas Cook have been accused of failing to take responsibility for the travel agent’s collapse.
Rachel Reeves, chair of the Business, Energy, and Industrial Strategy (BEIS) select committee, on Tuesday called Thomas Cook chairman Frank Meysman “deluded” about the state of the business before its collapse.
“Frank Meysman talked about the tragedy that happened on that Sunday in September when the company went out of business — tragedy, though, speaks of something that is out of your hands,” Reeves said.
“I don’t think this is something that was out of the hands of the board of the company. On the contrary, I would say that the collapse of Thomas Cook was due to the decisions of the board of the company, including you Mr Meysman and Peter Fankhauser.”
The comment came as Reeves took evidence from Meysman and other former executives on the first day of an inquiry into Thomas Cook’s collapse.
Meysman and his colleagues argued Thomas Cook could have been saved with minimal government support that would have cost the taxpayer less than the airline’s collapse.
“Ultimately, at the end of that Sunday, the parties involved said we’re still willing to do this deal, provided the government steps in,” Meysman said. He said a cash commitment from the government was only one of three possible proposals.
The proposed restructure “would have been a great plan to the benefit of employees, it would have not cost anything to the UK government in any way is my view, but it would have saved the employees, it would have save the hoteliers,” Meysman said. “I regret that it is not the case.”
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He pointed out that “other governments have made a different choice,” highlighting the German government’s decision to provide a €380m loan to Condor, Thomas Cook’s German carrier.
Peter Fankhauser, the CEO of Thomas Cook from 2014 until its collapse in September, made a similar argument to MPs.
“The recapitalisation plan, once successfully completed, would have put us in a position that we would have probably have been the best funded travel company in Europe,” Fankhauser said. “I firmly believe that after the recapitalisation, after the successful recapitalisation we would have had a new start.
“We made an estimate on how much a collapse of Thomas Cook cost and that was far higher than what we had asked [the government] for. But I don’t dare to criticise the government.”
Labour MP Reeves said the executives needed to take more responsibility for Thomas Cook’s collapse, which left 150,000 customers stranded overseas and destroyed 22,000 jobs globally.
She criticised them for failing to tackle Thomas Cook’s £1.2bn debt pile, abusing exceptional costs, failing to write-down goodwill quickly enough, and failing to sell off profitable parts of the business to help pay down debt.
Reeves said Meysman’s testimony on Thomas Cook’s final days was “just not the reality sir, because in the end you didn’t secure that money and that is why you are here today and that is something that I’ve had to repeatedly remind you of, Mr. Meysman.”
While Reeves was not convinced by Meysman’s argument for government intervention, she and other members of the committee were surprised by the lack of high-level government involvement in Thomas Cook during its final weeks.
Fankhauser testified that he was in regular contact with the Tourism Ministers of Germany, Bulgaria, Spain, Greece, and Turkey, but met with British Transport Minister Grant Shapps just once in early September. He said Thomas Cook was also advised not to contact the Business Department. However, Fankhauser said Number 10 were aware of the situation.
Government involvement was a “last resort,” Fankhauser said. There were concerns in Whitehall about breaching EU state aid rules, which is why the government was reluctant to backstop any restructure.
Even so, Fankhauser told the committee: “The feeling that I got or that I personally perceived was that the government… was positive, in saying we try and we are having a close look into it.”
READ MORE: Thomas Cook CEO 'sorry' for collapse but avoids questions on handing back pay
Ultimately, however, the government didn’t stand behind the restructure because it “didn’t want to create a precedent to support a business,” Fankhauser told MPs.
“I was awfully sad when I had the high official on the phone at 5 o’clock in the evening because I knew: Now I had to throw in the towel,” he said.
Earlier in the session, Fankhauser and his colleagues apologised to Thomas Cook’s staff, customers, and suppliers for the failure of the 178-year-old business, which collapsed at the end of September.
Reeves urged the executives to hand back pay and bonuses earned in the year’s leading up to the collapse to pay suppliers and staff. She also called for former board members to resign other board positions they hold in the wake of the scandal.
