Former Thomas Cook boss says debt was ‘manageable’
A former boss of failed holiday giant Thomas Cook has denied saddling the firm with a debt mountain after a mammoth expansion drive.
Manny Fontenla-Novoa - who was chief executive of Thomas Cook between 2003 and 2011 - told MPs on the Business, Energy and Industrial Strategy (BEIS) committee this week he believed the firm’s debt pile was “manageable” during his leadership.
He added that the management teams at the group since 2011 also did not flag up at any time in its annual reports that debt levels were unmanageable.
The comments came as shocked MPs were told by the Insolvency Service that Hays Travel paid just over £6 million to buy the 555 Thomas Cook shops - working out at only £10,800 for each site.
Mr Fontenla-Novoa and fellow ex-Thomas Cook chief executive Harriet Green both admitted different strategies could have saved the firm from failure.
But neither took responsibility for its demise last month, which put 9,000 UK jobs at risks and disrupted the travel plans of one million holidaymakers with future bookings.
It also sparked the biggest ever peacetime repatriation, with a two-week operation to fly 150,000 passengers back to the UK led by the Civil Aviation Authority.
BEIS committee chairwoman Rachel Reeves tweeted after the hearing that former Thomas Cook bosses keep coming up with “excuse after excuse”.
“Thomas Cook’s former bosses keep blaming everything and everyone except themselves for its collapse,” she wrote.
The BEIS committee heard last week from Peter Fankhauser - who was chief executive of Thomas Cook at the time of its collapse - that Mr Fontenla-Novoa’s deal to buy MyTravel in 2007 was the root cause of the debts and following woes at the group.
Mr Fontenla-Novoa said he was “incredibly sad” that Thomas Cook went bust, but denied it was his slew of deals and the burden of debt that ultimately led to its failure.
Ms Reeves said Mr Fankhauser believed the debt levels at Thomas Cook had “made his job impossible”.
But Mr Fontenla-Novoa said: “I can’t accept that.
“If Peter felt that, maybe they should have done something about that debt.”
He said that Mr Fankhauser should have ramped up disposals of assets earlier if the company believed it was unable to service that debt.
But Mr Fontenla-Novoa, who now runs his own consultancy firm, admitted mistakes were made.
He said: “Do I have regrets? Yes. If I could turn the clock back, would I do things differently? I would do lots of things differently.
“I’m sorry at the way it’s turned out.”
He defended the MyTravel deal and the merger of Thomas Cook with Co-op Travel in 2010 during his tenure, despite the weight of debts and questions over building a huge retail chain amid a shift towards online bookings.
The value of MyTravel was later subject to a mammoth £1.1 billion writedown, though Mr Fontenla-Novoa pocketed a £5 million bonus after the deal.
He insisted that “even today, high-street travel agents have a really important role to play in the travel industry”.
Ms Green - who now runs business across Asia Pacific for computer giant IBM - said she also failed to move quickly enough to turn around the company.
She said it was “devastating” that Thomas Cook eventually collapsed.
It also emerged earlier in the hearing that £11 million has already been paid out in fees to the two firms employed by the liquidators of Thomas Cook.
Dean Beale, chief executive of the Insolvency Service, told MPs that KPMG and AlixPartners racked up the fees for the first three weeks alone after Thomas Cook’s demise.
He said there were as many as 300 people at the two firms working on the liquidation at one stage immediately after the firm’s collapse.