Anger over collapse

Thomas Cook directors facing probe over fat cat pay deals

Thomas Cook

Fallen star: travel giant collapsed with mountain of debt

Thomas Cook’s management face an investigation into the tour operator’s collapse amid growing anger over multi-million pound pay and bonus packages.

Business secretary Andrea Leadsom has asked the official receiver, which oversees liquidations, to look at whether the actions of executives “caused detriment to creditors or to the pension schemes”.

Executives have been paid more than £20 million over the last five years during which the share price collapsed as analysts expressed concerns over the firm’s future.

Peter Fankhauser, the Swiss chief executive, has received £8.3m since he took charge in 2014. Chief financial officers Michael Healy and Bill Scott have together been paid around £7m in that same period. Belgian chairman Frank Meysman took home £1.6m.

The figures emerged as more than 20,000 staff were told they were out of work after the 178-year-old company failed to seal a rescue deal and plunged into liquidation.

Mr Fankhauser was at least credited with returning the company to profitability in 2015.

However, the travel giant collapsed with debts of £1.6 billion.

As a major exercise in repatriating 155,000 holidaymakers swung into action, Prime Minister Boris Johnson called for the company’s bosses to be held to account and measures taken to ensure tour operators take proper precautions.

How have fund managers fared?

Thomas Cook shares closed at 3.45p on Friday, a fall of 23%, as the company held on to hopes of securing a rescue deal, and were the biggest faller in the FTSE last year, from 124p to 32p, a fall of 80%. Now they are worthless.

One analyst said the company had faced a perfect storm of terrorism, Brexit, high debt and had failed to adjust to the online world. Ultimately it failed because it ran out of cash amid growing competition as so much money was going on debt repayment.

Yesterday’s big gainer was TUI, with the package tour operator able to consolidate customers in an industry that has been feeling the strain in the face of a shift in travel habits. Some tour firms also took advantage of the situation to raise prices.

A number of large fund houses, including Invesco, Jupiter, Orbis, and Standard Life Aberdeen, have held stakes in Thomas Cook.

Invesco sold out at the end of July while, Jupiter Asset Management is now below the “notifiable” level of 5%.

Offloading big positions in struggling companies are difficult because of the unwillingness of buyers to take on large volumes of shares.

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