Officials from Thomas Cook had no direct contact with British government ministers in the company’s final fortnight, chief executive Peter Fankhauser told MPs on Tuesday (15 October).
Addressing a hearing of the government’s business, energy and industrial strategy committee, Fankhauser said negotiations were channelled almost exclusively through Department for Transport officials rather than ministers.
This was despite Britain’s oldest travel firm seeking from government a £200 million “backstop” to secure a £900 million rescue deal led by largest shareholder Chinese travel firm Fosun.
Fankhauser said Cook held more than 100 meetings with “higher officials” across various government departments and bodies in the 12 months leading up to Cook’s collapse.
However, the business’s last contact with transport secretary Grant Shapps, Fankhauser told the committee, was on the evening of 9 September, before follow-up meetings with high officials from the Department for Transport on 16-17 September.
Fankhauser said the business was “heavily advised” to treat the DfT as the single point of contact. “They didn’t want us going in different directions. We took that seriously,” he said.
Cook chief executive Fankhauser said at the same time, he was conducting parallel discussions with ministers in Spain, Bulgaria, Turkey, Germany and Greece.
Committee chair Rachel Reeves remarked pointedly it was at the very least unusual a British company – the country’s oldest travel firm – had contact with several government ministers in the lead up to its collapse, “none of them British”.
Cook chairman Frank Meysman said the business was told what the appropriate channels were and that they went up to a “high level” but stressed he did not have any contact with ministers in the UK.
Fankhauser added “it was on the minister’s table and in Number 10”. “We would have liked a meeting on Monday [23 September] to go through different compromises. It didn’t happen,” he said.
Cook’s chief executive said his team went into the weekend of 21-22 September knowing it would be critical to Cook’s future. “We knew there was a cliff edge at the start of October when we had to pay our suppliers,” he said.
Fankhauser said he was confident there could be a positive outcome. “We knew we needed something to take off again on Monday,” he said.
MP Drew Hendry pressed, asking: “Why did the government say no?”
Fankhauser responded by saying they didn’t want to set a precedent, adding when he received a call from a high official at 5pm on Sunday, he knew “we had to throw in the towel”.
Cook attempted to escalate its negotiations with government after Fosun eventually declined to provide the £200 million security required by Cook’s banking partners to unlock the rescue deal.
Following staunch pressing by MP Antoinette Sandbach, Fankhauser confirmed Cook knew about the the £200 million requirement when it announced it had reached “substantial terms” on the £900 million rescue deal in late-August.
He said though knowledge of the £200 million came in the form of advice from an independent business review rather than a direct request from its banks for the cash, which eventually became the pivotal stumbling block.
Sandbach pressed Fankhauser on why Fosun would not commit the £200 million “standby equity”, to which Fankhauser said Fosun did not want to commit to a range of additional guarantees that would have arisen from the provision.
“If you had such a tight business plan, why did your lenders not step in to provide that facility,” Sandbach inquired. Fankhauser said he could not answer that question.
Meysman stressed hoteliers and foreign governments were ready to step in and that Cook came within £100 million of the cash it required, adding he felt the business would have ultimately secured the financial assurances it needed.
Reeves said: “You were wrong to be sure, because you didn’t get there,” adding it was not the government’s fault Cook had amounted huge debts and that it was not obliged to bail the firm out.