Thomas Cook is one of the oldest travel agencies in the world, operating their own flights, ships, hotels, etc, whose founders effectively invented modern tourism (listen to this excellent Stuff You Missed in History Class episode for the fascinating and fraught tale of how that happened) but a consolidation in the travel industry combined with private equity chicanery that loaded the company up with $2.1b in debt in order to pay out investors drove the company to its knees, and, last week, it finally died.
The collapse stranded 150,000 passengers and resulted in the cancellation of 600,000 paid-for future holidays, and the UK government has had to dig into its own pockets to pay to bring 16,500 British stranded passengers home (the largest peacetime repatriation in UK history!), leaving it to the British taxpayers to clean up after the financial wizards who crashed the firm.
But those financial wizards aren't done yet: Chief Executive Peter Fankhauser has pulled in GBP8.3m since he took the job in 2015, and other execs drew fat checks -- even as the stranded aircrews were left to fend for themselves (some say they were quoted GBP10,000 for flights home).
It's a story that's familiar to anyone who followed the looting and destruction of Toys R Us, right down to the employees being turfed out with nothing while the sociopaths who engineered the destruction took home millions.
Thomas Cook was brought down by a $2.1 billion debt pile, built up by a series of ill-fated deals, that hobbled its response to nimble online rivals. It had to sell three million holidays a year just to cover interest payments.
With the business draining cash, Chief Executive Peter Fankhauser found its lenders were no longer willing to step in. Fankhauser has earned 8.3 million pounds ($10.3 million), including 4.3 million pounds in 2015.
The Unite union said changes were needed to stop UK airlines collapsing at huge cost to the taxpayer, workers and customers.
“Ministers must legislate as necessary to allow UK airlines in financial trouble to trade in protective administration,” the union said. “Other countries do it as a matter of course. We should do it in the UK.”
As Thomas Cook customers return home, blame game begins [Paul Sandle and Kylie MacLellan/Reuters]
How to Get 150,000 Stranded People Home in 2 Weeks [Adam Rogers/Wired]