Thomas Cook crisis: Holiday hotspots ‘risk being refugee camps for tourists’
Holiday chiefs earned huge payouts despite firm’s 95% slump in value to just £69m
THOMAS Cook could collapse tonight amid fears that British tourists face being turfed out of their hotel beds, effectively turning European holiday resorts into ‘refugee camps’.
The apocalyptic warnings will worry hundreds of thousands of holidaymakers who face being stranded abroad, unable to attend key events such as weddings or return to work, if the company cannot be rescued this weekend.
Ministers and the Civil Aviation Authority are preparing to enact Britain’s biggest peacetime repatriation, codenamed Operation Matterhorn, if Thomas Cook goes to the wall, which sources last night said was looking increasingly likely.
The 178-year-old British travel firm will be put into administration at midnight unless a rescue package is agreed later today, sources have told The Mail on Sunday. An urgent meeting with creditors and shareholders is taking place this morning at a City law firm.
In a last ditch bid to win support, the company is understood to be warning regulators about the practicalities of the Government’s repatriation plans. One industry source said the firm was questioning whether the scheme – the cost of which has been estimated to be £600 million – would have access to enough planes to fly Britons home without major delays. The source said spare aircraft are in short supply across Europe and the CAA could struggle to put on flights for up to 180,000 who may be affected.
The source also warned that tourists staying in hotels through Thomas Cook packages could be ‘turfed out’ of their rooms by managers concerned that they may not get paid – particularly if they have to extend their trips due to delays.
‘This is a doomsday scenario, but you could see tourist hotspots effectively turned into refugee camps,’ the MoS was told. Two years ago, the Government co-ordinated a similar repatriation scheme when Monarch Airlines collapsed. But sources said Thomas Cook presents an ‘unprecedented’ challenge because it is a larger operator and runs package holidays.
Ministers are coming under increasing pressure to bail out Thomas Cook with a financial lifeline today. The company needs to secure £200 million in emergency funds to complete a rescue deal with its lenders and a Chinese tourism firm.
Manuel Cortes, the general secretary of travel workers union TSSA, wrote to Business Secretary Andrea Leadsom yesterday urging the Government to provide Thomas Cook with support amid fears for the future of its 21,000-strong staff. ‘The company must be rescued no matter what,’ he said in the letter. ‘No British Government in its right mind would countenance the loss of so many jobs and the prospect of just one major travel operator – TUI – controlling the mass market.’
On Friday night, passengers flying from Antalya, Turkey, to Glasgow faced further misery when a fault with their Thomas Cook plane stopped it from taking off. Hundreds who are now left stranded without a hotel to go to fear they will not get home before the travel company collapses. One passenger, Beka Whitelaw, posted on Twitter: ‘4am…300 of us now kicked out of Antalya airport.. no hotels – children, elderly and disabled stranded…are we to sleep in the street? Not good enough! Only info given is that we’ll receive further update at 2200 tonight!’ Sami Ryder, 26, who works in marketing, is due to get married to Dean Turgeon with a Thomas Cook package in Santorini next September. She said: ‘ The wedding package includes wedding venue, celebrant to marry us, bouquets etc and we have around 30-35 guests flying out with us.’ She said she now fears she and Dean, 27, who live in the Midlands, could be left having to reorganise wedding plans.
Another bride- to- be, Natasha Cairns, has until October 16 to rearrange wedding plans if Thomas Cook goes bust.
She and her fiance are booked to go to Cyprus for their ceremony, reception and honeymoon. They are due to spend two weeks away and 47 guests are planning to travel out for first week. She said: ‘Nobody can give us a straight answer.’
Thomas Cook, founded in 1841, has experienced major financial problems in recent years, and has built up debts of £1.7 billion.
After launching a search for extra funds, in August the firm announced a £900 million refinancing deal with banks and Fosun Tourism, a Chinese travel giant. But the deal was thrown into disarray when Thomas Cook revealed it would need to secure an extra £200 million.
A Department for Transport spokesman said: ‘We do not speculate on the financial situation of individual businesses.’
‘We could be left to sleep on the streets’
THOMAS Cook bosses have been paid more than £20 million in the past five years even though they have led the tour operator to the brink of collapse.
Swiss chief executive Peter Fankhauser alone has taken home more than £8 million since being handed the reins at the beleaguered travel group in 2014.
The total awarded to the top brass is equivalent to more than a quarter of the company’s current £69 million value.
The figures provoked anger last night as holidaymakers, staff and small shareholders faced increasing uncertainty. Fears are growing that Thomas Cook will have to call in administrators at midnight tonight.
Thomas Cook, a venerable firm founded 178 years ago, is close to collapse as it seeks £200 million to secure its future.
Struggling to contend with a £1.7billion debt mountain in late August, the company agreed a £900 million rescue deal with Chinese firm Fosun – its largest shareholder – lenders and bondholders. But Thomas Cook revealed last week that on top of the £ 900 million, its lenders want an additional £ 200 million to cover the risk that it could lose more money over the winter holiday season. The Government is coming under pressure to offer a loan to guarantee this money.
Sources close to Thomas Cook suggest it is unlikely the extra finance would be needed in practice, so the support would probably represent a low risk for Ministers.
Hundreds of thousands of holidaymakers are facing worry over their trips abroad, while Thomas Cook’s 20,000-plus workforce are fretting about their futures. In addition, bosses across the travel sector are concerned that the collapse of Thomas Cook could spark a ‘domino effect’, taking out smaller firms - such as hotel businesses – across Europe. Around 1,000 small hotel companies across the continent are said to be ‘largely dependent’ on Thomas Cook customers filling their rooms.
Travel union TSSA is calling on the Government to step in. Its boss, Manuel Cortes, told The MoS: ‘Thomas Cook supports many jobs across thousands of smaller travel agents and suppliers up and down the land. That is something which should send a shiver down the spine of the Government.’ Meanwhile, thousands of small shareholders in Thomas Cook face losing their investments. Since the autumn of 2014, shortly before Fankhauser took charge, the firm’s stock market value has crashed from around £1.7 billion to £69 million this weekend. Despite this 95 per cent slump in value, our analysis shows that the company’s executives and non-executives were paid £20.5 million between 2014 and 2018.
Fankhauser was paid £4.3 million in his first full year, £1.2 million in 2016 and £1.8 million in 2017. His remuneration fell to £1 million last year because he did not get a bonus.
Supporters of Fankhauser last night leapt to his defence, saying he had performed well despite the firm’s declining fortunes.
Fankhauser inherited a large debt pile after a refinancing in 2012. The firm has since paid £1.2 billion of financing costs alone and now has a debt mountain of £1.7billion. After taking charge, Fankhauser hauled Thomas Cook into profitability in 2015, 2016 and 2017. Then in 2018 the heat wave resulted in more Britons taking holidays at home and in 2019 the falling pound made foreign breaks more expensive. Last February, the firm announced it was attempting to sell its airline but in August it instead opted for a full-scale rescue deal.
Fankhauser owns 2.3 million Thomas Cook shares which were worth £1.75 million a year ago, but are now valued at £80,000 and could soon be worthless.
Luke Hildyard, director of the High Pay Centre, last night condemned Fankhauser’s remuneration. He said: ‘While ordinary Thomas Cook workers face terrible uncertainty, the board walk off with huge sums and, in all likelihood, into other lucrative directorships.
‘If you’re rich and important enough in British business, your record of conduct and competence scarcely seem to matter.’
Thomas Cook paid its two chief financial officers – first Michael Healy and now Bill Scott, who started at the beginning of 2018 – £7 million since 2014. More than £4 million was paid in this time to the firm’s non-executive directors, including Belgian chairman Frank Meysman, who took home £307,000 last year.