Is Hays offering false hope to East Anglia’s Thomas Cook staff?
PUBLISHED: 06:00 11 October 2019 | UPDATED: 14:30 11 October 2019
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If Thomas Cook failed why would another travel firm make it work?
For many the collapse of Thomas Cook came as a huge shock.
The 178-year-old travel firm's failure left tens of thousands of holidaymakers either stranded aborad or unable to take trips they had planned.
Honeymoons were ruined. Holidays families had spent all year saving for were lost.
And more than 21,000 employees - a significant number from East Anglia - were facing redundancy.
But this week something even more shocking happened - another travel firm came to the rescue.
Hays is a Sunderland firm which, under the stewardship of husband and wife team John and Irene Hays, is now a travel behemoth.
When Thomas Cook went under it was £1,7bn in debt. On top of that eye-watering figure the firm owned another £1,3bn to suppliers.
During the frantic last few days of the high street brand's life desperate bids to save it failed. Many questioned why the government didn't bail the company out.
Of course the government did the right thing in ignoring those pleas. As hard as it might be for people stranded abroad or workers facing losing their jobs, the taxpayer cannot be expected to rescue every company that finds itself in difficulty.
Time and again I heard the argument "why do the banks get bailed out and not Thomas Cook?" That is a rather silly stance.
The financial crisis of 2008 cannot be compared to Thomas Cook's demise - as sad as it was.
If there are no risks to chief executives then increasingly bad decisions will be made. Bosses must never be able to take reckless decisions safe in the knowledge that even if the very worst was to happen there would be no consequences.
After similar instances of travel firms failing there are now schemes to ensure people are not left out of pocket - or in foreign countries - which appear to have worked well on this occasion.
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But something clearly went very badly wrong at Thomas Cook. Boss Peter Fankhauser believes he and his team did everything they could to turn the firm around though.
Since 2014 he has been paid £8.3m - although some of that is in shares he never cashed in. That's right - £8.3m. How can the firm justify that much money on a boss that ultimately failed?
Well there was a time when it appeared Fankhauser had pulled off a miracle - the firm almost collapsed in 2011. And yet just a year after his appointment - and for the next two years - the firm was back in profit.
So what went wrong in the end?
Nothing is easy on Britain's high streets. That is no secret. But travel firms have also had to endure some seismic events that have damaged profits. Terror attacks, Brexit uncertainty, a rare sweltering British summer and the tumbling value of the pound ... but none of these toppled Thomas Cook.
A company of that size should have been able to withstand a few rocky years.
Fankhauser's firm was guilty of a failure of corporate finance. In the past six years the firm paid £1.2bn in finance charges. Basically they cooked the golden goose.
So, happily, the chances are that Hays can make a success of Thomas Cook. The fact that around a million people were either abroad or had outstanding bookings with the firm when it went under proves Thomas Cook was not failing to get people booking.
I doubt all of the 555 branches Hays has secured will survive but let us hope that jobs in Norfolk and Suffolk are safe.
Many challenges remain - but John and Irene might just have saved the day.
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