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Thomas Cook CEO 'sorry' for collapse but avoids questions on handing back pay

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Peter Fankhauser, CEO of Thomas Cook, arrives at Portcullis House in London on Tuesday to answer MPs questions about the company's collapse. Photo: Chris J Ratcliffe/Getty

The chief executive who oversaw the collapse of Thomas Cook has apologised for the company’s demise but dodged questions on whether he would hand back pay and bonuses earned before it went bust.

Peter Fankhauser, who ran the travel agent from 2014 until its collapse last month, told MPs on Tuesday he was “deeply sorry ... that we couldn’t save this iconic brand.”

“I’m deeply sorry about this failure and I’m deeply sorry for the distress we caused to millions of customers who booked holidays with us and who were on holidays with us,” Fankhauser said. “I’m especially sorry for all my colleagues who worked extremely hard and tirelessly to make Thomas Cook a better company.”

READ MORE: Thomas Cook collapse dubbed 'sorry tale of corporate greed' as MPs launch probe

Fankhauser and other former Thomas Cook executives appeared before the Business, Energy, and Industrial Strategy (BEIS) select committee in the parliament on Tuesday for the first day of its inquiry into the collapse of the 178-year-old travel operator.

Thomas Cook collapsed at the end of September after failing to secure an 11th-hour bailout deal. The collapse left 150,000 people stranded overseas and led to the biggest government-led repatriation effort since the second world war. About 22,000 jobs around the world were also lost, although some staff have already found employment after a deal to takeover Thomas Cook stores.

Former Thomas Cook employees arrive at Portcullis House in London to listen to evidence given to the BEIS select committee after the recent collapse of the company. Photo: Peter Summers/Getty

Fankhauser said on Tuesday he was “grateful” for the government-led repatriation effort.

However, he dodged questions from BEIS chair Rachel Reeves on whether he would hand back pay and bonuses to help pay for government costs. As well as the repatriation effort, taxpayers will pick up the tab for unpaid wages and redundancy costs for the business’ 9,000 UK staff.

Thomas Cook executives received £20m in pay and bonuses in the five years before the business ran into trouble. The figure has provoked public anger and transport secretary Grant Shapps suggested directors could have bonuses clawed back or be disqualified from future roles.

Asked by Reeves if he would hand back the near £500,000 cash bonus awarded in 2017, Fankhauser said: “It’s not up to me to decide that.”

READ MORE: Thomas Cook staff fear for their homes as they head to Jobcentres

Fankhauser told the BEIS committee he was “not going to try and defend my base pay” in relation to front line Thomas Cook staff but said he “worked extremely hard” for the money.

He pointed out that he was paid no bonus in 2018 and 2019, and half of his total compensation was in Thomas Cook shares. Fankhauser said he never sold these share as he “was believing in the company.”

He added: “I’m not the one who is setting my pay and I’m not the one who is deciding my bonus.

“I fully understand where you are coming from and I fully understand the sentiment in the public ... I worked tirelessly for the success of this company and I am deeply sorry I was not able to secure a deal.”

Reeves said Fankhauser’s apologies were “hollow” given his reluctance to commit to handover historic bonuses and pay.

Left to right: Thomas Cook ex-chair of remuneration committee Warren Tucker, ex-CFO Sten Daugaard, ex-CEO Peter Fankhauser, ex-chairman Frank Meysman, and ex-chair of audit committee Martine Verluyten, at Portcullis House in Westminster, London. Photo: House of Commons/PA/Getty

Fankhauser blamed Thomas Cook’s collapse on a downturn in the European travel market sparked by the heatwave in 2018 that led to staycations and growing Brexit uncertainty putting off holidaymakers.

“We were overtaken at sometimes by events that made it difficult to pay back,” Fankhauser said, referencing Thomas Cook’s £1.2bn debt.

“I tried to tackle this challenge by really transforming the business into an old fashioned tour operator to a modern tour operator ... the pace we could do this was not fast enough.”