Thomas Cook collapse: who is to blame?
Ministers point finger at highly-paid directors as Labour condemns the government
Thomas Cook bosses have come under fire for taking multimillion-pound pay-outs before the 178-year-old travel company collapsed.
Accusations of “fat-cat” greed began to emerge as the Civil Aviation Authority (CAA) yesterday launched the biggest repatriation effort since the Second World War to bring home more than 150,000 stranded holidaymakers.
Prime Minister Boris Johnson led the criticism against the company’s directors, asking whether it was right that they should “pay themselves large sums when businesses can go down the tubes like that”.
A Daily Mail audit found that five Thomas Cook executives had taken home nearly £47m in “pay and perks” since 2007.
The Times notes that last year “the company was urged by its auditor, EY, to stop using an accounting method that could have been used to flatter its financial performance and improve the pay of bosses”.
Business Secretary Andrea Leadsom has written to the Insolvency Service calling for a fast-track investigation into how the company collapsed, covering the “conduct of directors immediately prior to and at insolvency” and whether they “caused detriment to creditors or to the pension schemes”.
However, The Guardian says it is the Government who has been “accused of sealing Thomas Cook’s fate”.
Negotiations on Sunday about a £1.1bn financial rescue fell apart after UK ministers turned down the company’s request for up to £250m support to help tide it over the winter, says the newspaper.
Labour’s shadow chancellor John McDonnell told the BBC: “To just stand to one side and watch this number of jobs go and so many holidaymakers have their holiday ruined, I just don’t think that’s wise government.”
But the Prime Minister told reporters: “Clearly, that’s a lot of taxpayers’ money and sets up, as people will appreciate, a moral hazard in the case of future such commercial difficulties that companies face.”
And Transport Secretary Grant Shapps told ITV’s Good Morning Britain: “I think the problem of putting money into it, apart from the fact governments don’t usually go around investing in travel companies, is that it may have just stretched things out for a couple of weeks and we could have been exactly where we started.”
Meanwhile, The Telegraph pinpoints Thomas Cook’s 2007 merger with rival package holiday firm MyTravel as the move that “sowed the seeds of the company’s downfall this week”.
The buy-out “ladled billions of pounds of loans onto a business that was vulnerable to two major threats: the rise of holidays bought over the internet, and variable factors such as the weather”, says the newspaper.
The 2018 UK heatwave “wilted sales”, investors began to lose confidence and then the original 29 March 2019 Brexit deadline made holidaymakers nervous about booking trips, says the Telegraph.
It concludes that, despite Thomas Cook reaching a “substantial agreement” with the Chinese conglomerate Fosun over the summer, “a last-minute demand by lenders for an additional £200m injection was one of the final nails in the coffin of a once-great British company, which has now been consigned to the history books”.