Nearly two years since the collapse of Monarch Airlines, another major UK holiday carrier is standing at the edge of the abyss as Thomas Cook scrambles to secure vital funding.
Thomas Cook, which operates Thomas Cook Airlines and Condor, as well as a very large retail chain of travel agencies, is in last minute attempts to raise an additional £100m in funding on top of the £900m it has already secured.
The biggest concern for the company however, comes from the UK’s Civil Aviation Authority, which over the weekend signalled that it has begun contingency planning for the possible collapse of the group, including the airlines division.
The CAA is responsible for issuing licences to UK operators, and Thomas Cook’s is due for renewal on 1st October (two weeks away).
If the CAA is not convinced that the company has the solvency and backing to see it through the next licence period, it simply will not issue one. That is exactly what happened to Monarch Airlines just two years ago.
It’s exactly that decision not to issue a new licence that was terminal for Monarch, and it is certainly the same fate that awaits Thomas Cook if the CAA come to the same conclusion.
Where these critical times for such a strong travel brand, not only in the UK but across Europe too, are worrying – it is also worth considering the why’s and how’s. How has such a well known and trusted travel company come to be in the position it is in, and why were lessons not learned from the recent collapse of other travel operators. Monarch aside, another one in recent memory is XL.
As for why Thomas Cook hasn’t learned the lessons of recent failures in the sector, well only those in charge can answer to those charges. But whilst we’re discussing those in charge, the salaries of those in charge of the company remain excruciatingly high.
In the financial year 2016, chief executive Peter Fankhauser trousered £1.2m alone, and even that was substantially down from over £4m the year previous. That is in stark contrast to the average salary of staff at the company being in the region of £22,000 per annum.
Thomas Cook as a company has an endemic problem of paying bonuses to senior managers regardless of the overall company performance, and those bonuses as well as other gratuities paid – again often on dubious grounds – are on top of the base salaries.
The issues of the attitudes of the top team mentioned above have been reported before. I grabbed those stats from an article in the Independent newspaper for example.
Sadly, and unfortunately this is becoming a regular occurrence in the corporate world, a lack of corporate governance, shareholder involvement and bluntly, corporate greed, is killing good companies such as Thomas Cook, and only going to show that the vast chasm between the working classes and the higher classes continues to grow.
Lest not forget, it is the 100,000’s of working class holidaymakers, saving up their hard earned cash to book their foreign holiday with these companies, that is directly paying the wages of the senior management every year.
Is the management of Thomas Cook that detached from their customers? Well I can tell you this for free, Mr Fankhauser won’t be losing any sleep over the collapse of the company at exactly the time that those who have paid him his wages are worrying about what has happened to the holiday they have been looking forward to all year. He similarly won’t be losing any sleep whilst the thousands of staff suddenly find themselves without employment.
Yet again, a good company facing ruin by bad, greedy, self-serving management.
To make the situation even more concerning, it would appear that despite the precarious nature of Thomas Cook as a business breaking in the media, and the CAA putting in its contingencies – which includes contracting other airlines to rescue potentially stranded holiday-makers (no small feat) – those at the top are not being honest with those making them the money.
Even as I write this article, a Thomas Cook representative tweeted in response to a concern from a customer about their booking, that “…there is nothing to be worried about, all of our flights will be operating as normal and will be for many more years!”
I’m very much for the positive attitude from @ThomasCookUK staff regarding the company’s future, and I applaud it. What I find concerning though is the comment which I’ve seen a few times on twitter that the company will be around “for many more years”. How do you know that??
— Kevin Coy (@KevCoyUK) September 16, 2019
Of course, it could be that the particular member of staff who tweeted that response is being positive about the outlook for the firm. Sadly though, that has been the general response to many twitter queries across the weekend, and is obviously the narrative being enforced by Thomas Cook.
It is also desperately worrying that representatives of Thomas Cook are either being directed to put out a message, or feel qualified enough themselves to proclaim that all of their flights will be operating as normal and will be for many more years. That is a very strange statement to make, very. It is also a comment that, within weeks if not days, could come back to haunt them.