While a former chief executive of the now collapsed company Thomas Cook has claimed that his leadership role and decisions had no part in the collapse of the century old global company, another former CEO has hinted otherwise.
British members of parliament inquiring into the sudden collapse of were informed by Manny Fontenla-Novoa about the company had not piled up unmanageable sums of debt because of a series of acquisitions under his leadership.
However his successor Harriet Green said at the hearing that the company’s debt position was critical when she had taken over as the chief executive.
According to the last chief executive, Peter Fankhauser, one of the major reasons for the collapse of the company was its huge debt.
Thomas Cook had been benefited and was in “in great shape” for future growth because of his business strategy of acquisitions that included acquisitions such as a 2007 merger with MyTravel, said Fontenla-Novoa to the MPs on the business, energy and industrial strategy select committee of the United Kingdom.
“I can’t accept that, because if Peter felt that, then maybe they should have done something about that debt. They should have looked at what we did in 2010 in disposing of some assets. Maybe they should have done that earlier. If they’d believed that they could not service that debt, they should have done something about it before 2019,” Fontenla-Novoa said when he was asked to comment about the remarks of Fankhauser that “had his hands tied” and found his job “impossible” due to the debt.
Thomas Cook “shrank capacity” in real terms because the company had decided to bring down the number of available seats on aircraft or hotel rooms from about 2011 after he had left the company, Fontenla-Novoa said.
“You look at turnover in 2010, it was £9bn. You look at turnover in 2019, [it was] £9bn, which in effect, because of inflation, capacity has gone down,” Mr Fontenla-Novoa said.
“In the same period of time, Jet2holidays have grown from nowhere to four million passengers a year. On the Beach have grown from nowhere to 1.6 million passengers a year. Love Holidays, similar amounts. I believe there was growth in the market. I believe we would have grown with that growth in the market. Instead, Thomas Cook… has shrunk, competitors have grown.”
Fankhauser’s comments that Thomas Cook could not have grown because it was spending £150m to £170m per year servicing debt. Was cited by Reeves. .
However, it “was not about buying businesses or investing in technology, it’s about the capacity that you put onto the marketplace”, Fontenla-Novoa said.
In 2012, when she had taken over the company, there were “three profit warnings, a huge wall of debt, and a business model that was entirely out of sync with the industry”, said former chief executive Harriet Green.
“That’s what I fought for 28 months, 22 hours a day, to change. And my responsibility is that I failed to complete that. This is a brand that was loved, with staff as loyal and as amazing as I’ve seen anywhere in the world,” she added.
(Adapted from BBC.com)