A former senior manager at the travel giant spoke to Travel Weekly to reveal ‘a catalogue of errors’ over 10 years which led to Thomas Cook’s final demise.
1 – The merger with MyTravel was strategically wrong, buying a company that wasn’t in the best of health, an error proven 10 years later with a £1 billion write-down. The deal meant Cook inherited some toxic hotel leases.
2 – The waste of £200 million-plus on trying to build a pan-European reservation system – an impossible task with each country wanting different things. It ended with no new system.
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3 – A £290 million share buy-back programme in 2008, using company cash to shore up the share price.
4 – The purchase of companies such as Hotels4U with no clear strategy.
5 – Entrance into the Russian and Indian markets – a complete disaster.
6 – Trying to create a pan-European e-commerce platform in 2010 and spending vast amounts on a London office, taking autonomy from the operating companies where the trading expertise was. Result – hundreds of millions wasted.
7 – Senior management refusing to accept the retail footprint was too large, and purchasing The Co-operative Travel, duplicating stores in many towns. It cost the business at least £200 million.
8 – After rightly ousting the CEO in 2011, the replacement embarked on a personal brand-building exercise.
9 – Doing too little too late on differentiating product, with input costs outpacing selling prices, driving down profit margins.
10 – The downward spiral started in 2007. The latest management have been fighting historical debt and mismanagement, doomed from the day they started.
Twelve years of turmoil at Thomas Cook
2007:
Thomas Cook, which is jointly owned by German retail group Karstadt-Quelle and Lufthansa, to merge with MyTravel (Airtours). Lufthansa sells its stake. Merged Thomas Cook Group lists on London Stock Exchange.
2008:
Global financial meltdown. In Sept, XL Leisure Group fails, triggering major repatriation.
2009:
Recession sees UK outbound travel market decline 20% in 2008-10.
2010:
Cook announces merger with The Co-operative Travel.
2011:
July: Regulatory approval for Cook/Co-op merger expands group retail estate to 1,204 shops. Cook issues third profit warning in 12 months (previous warnings in Aug and Sept 2010).
Aug: Chief executive Manny Fontenla-Novoa resigns.
Oct: Cook agrees £100 million credit deal; completes merger with Co-op.
Nov: Suspends results announcement pending fresh £200 million deal with banks.
2012
April: Cook confirms fresh talks on refinancing.
May: Secures £1.4 billion refinancing.
July: Harriet Green appointed chief executive.
2013
Oct: Cook adopts ‘Sunny Heart’ logo.
Dec: First full-year operating profit in three years.
2014
Oct: Cook UK head Peter Fankhauser admits: “The whole Airtours integration went completely wrong.”
Nov: Harriet Green departs. Fankhauser appointed group chief executive.
2015
March: Fosun acquires a 5% stake in Thomas Cook.
May: Inquest into deaths of two children from carbon monoxide poisoning on Cook holiday in Corfu in 2006 ends with a verdict of “unlawful killing”.
June: Cook/Fosun announce joint venture. Beach massacre of UK tourists in Tunisia.
Dec: Cook reports £19 million profit after tax after five barren years, following losses of £158 million (2014), £283 million (2013) and £378 million (2012).
2016
Jan: Cook switches 1.2 million seats from Turkey to the Western Med following security concerns.
Aug: Fankhauser reports: “Despite the trading environment, Thomas Cook is a much stronger business. We’re well positioned to capitalise on opportunities when markets improve.”
Dec: Cook reports operating profit of £205 million and pays first dividend to shareholders in five years. Fankhauser says: “The actions we took to shift our holiday programme into the Western Mediterranean helped us maintain revenue.” Travel Weekly reports: “Thomas Cook UK’s operating profit has gone from zero in 2012 to 4.9% a year ago and 6.4% in the 12 months to September.”
2018
Sept: Cook profit warning. Blames hot summer for decline in lates market.
Nov: Second profit warning, including a reclassification of charges, issued two days before full-year results.
2019:
Feb: Cook announces review (sale) of its airline.
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