The management of Thomas Cook will be investigated by a UK government-backed probe following its collapse earlier this week.
Britain’s Secretary of State for Business, Andrea Leadsom, has asked the Insolvency Service to investigate the role of management in the decline of Thomas Cook, while the full cost of the world’s oldest tour operator’s demise is still being assessed.
This comes after multimillion-dollar bonuses paid to Thomas Cook executives over the past fiver years were recently brought into the limelight, with reports they raked in more than £20 million ($36 million) despite long-held fears about the company’s future.
Peter Fankhauser has been payed £8.3 million ($15.3 million) since becoming CEO in 2014, including a £2.9 million ($5.3 million) bonus in 2015.
According to The Telegraph, chief financial officers Michael Healy and Bill Scott have together been paid around £7 million ($12.9 million) since 2014, while the company’s non-executive directors were payed more than £4 million ($7.4 million) during this time.
Speaking in New York on Tuesday, Prime Minister Boris Johnson said: “I have questions for one about whether it’s right that the directors, or whoever, the board, should pay themselves large sums when businesses can go down the tubes like that.”
Johnson, however, faces questions over his government’s refusal to bail Thomas Cook out at the eleventh hour, after the travel company sought state funds. Bloomberg reported Johnson said an intervention would have set up “a moral hazard”.
This came after months long negotiations between Thomas Cook and Fosun Tourism Group – owned by Chinese conglomerate company Fosun International, who also owns Club Med – for a proposed $1.1 billion refinancing.
Further reports indicate that offers were on the table predicated on government support.
Lenders including Royal Bank of Scotland Group and Lloyds Banking Group then sought an extra £200 million from Thomas Cook, prompting the travel company to turn to the government, only to have its pleas rebuffed, according to Bloomberg.
Despite its collapse, multiple subsidiaries of Thomas Cook remain profitable.
Thomas Cook Northern Europe, which includes Nordic tour companies Ving, Spies and Tjäreborg, resumed operations on Tuesday, according to spokesman Fredrik Henriksson.
Speaking to Bloomberg, Henriksson said the Nordic business is profitable and that he expects the administrators of Thomas Cook to find a buyer.
Condor, a Thomas Cook subsidiary and German leisure airline operating nearly half of the travel company’s aircraft, said on Tuesday it had received a pledge from the German government for a six-month bridging loan of 380 million euros. Condor also intends to file an application for the opening of a protective screen process to detach itself from its insolvent parent company.
An estimated 600,000 travellers around the world (150,000 of them Brits) have been left in the lurch as a result of Thomas Cook’s collapse.
Founded in 1841, Thomas Cook operates as a wholesaler, as well as owning airlines, hotels and resorts across 16 countries. It employs 21,000 staff who service 22 million customers.