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Thomas Cook collapse: 'fat cat' pay row as repatriation continues - business live Thomas Cook collapse: financial regulator may launch probe - business live
(about 5 hours later)
The boss of the Civil Aviation Authority says Operation Matterhorn, the repatriation of Thomas Cook customers, has had some difficulties - but overall is going well. The Financial Reporting Council’s job is to “promote transparency and integrity in business”.
Speaking on BBBC Breakfast, Dame Deirdre Hutton said: That means upholding standards for accounting and actuarial work, and ensuring that corporate reporting and auditing is up to scratch.
“It’s a two-week operation, that’s mainly because people go on holiday for two weeks, so we want everybody to continue to enjoy their holidays and we’ll bring them back on the day they were going to come back anyway.” If it does probe Thomas Cook’s collapse, as it’s threatening, the FRC could examine two issues
“I’m really pleased that the first day went well, we got back 95% of those we were intending. 1) Thomas Cook’s use of one-off charges. The company was a keen user of ‘exceptional items’ -- stripping certain costs out of its financial results. That’s perfectly above board in principle, if it gives the City a better view of the underlying business. But it can be abused - which is why auditors need to ensure one-off items really are unusual.
There were some operational difficulties and we’ll continue to have that ... there’ll be some bumps in the road and if people could bear with us, but we have got off to a reasonable start which is very good.” 2) Goodwill write-downs. Back in May, Thomas Cook took a £1bn impairment charge relating to its 2007 merger with MyTravel. Thomas Cook said it had to revalue the deal “in light of the weak trading environment” -- but you could ask why it took 12 years to conclude it overpaid.
There’s nobody abroad who should have been home. We’re bringing people back when their holiday ends, so we’ve got another 135,000 people to bring....We’ve done 8% so far, we’ve got 13 days to go, so it’s still a big operation.” Ben Martin has written a good piece about this in today’s Times, here. He points out that EY took over as Thomas Cook’s auditors in 2017, from PWC, and “strongly recommended” strengthening its procedures.
We heard yesterday that around 30 holidaymakers in Tunisia were sent back to their hotels, because there wasn’t enough space for them on the repatriation flight. Thomas Cook's auditor, EY, warned it over the way it adjusted its accounts in 2018. EY said in the firm's annual report it "had strongly recommended to management that they strengthen the process over the identification and approval" of exceptional items https://t.co/WJHtWR7YXh
There were also long queues and delays at airports such as Mahón, Menorca and Palma, Mallorca, in the Balearic Islands. Newsflash! Britain’s accountancy regulator has announced it could launch an urgent probe into the collapse of Thomas Cook yesterday.
The Civil Aviation Authority has just announced that it brought 14,700 Thomas Cook customers back to the UK on Monday. The Financial Reporting Council says:
It is planning to run another 74 flights today, which should transport another 16,800 passengers at the end of their holidays. “In light of recent developments at Thomas Cook we are considering whether there is any case for investigation and enforcement action as a matter of urgency and in cooperation with the Insolvency Service.”
However, some passengers will not be landing where they expected. That follows the government’s decision to fast-track the Insolvency Services’s inquiry into why Thomas Cook fell into insolvency.
For example, flight MT1217 was due to land at Gatwick, but is instead being sent to Manchester. That means a long coach ride down to London to complete the journey. This is odd. The departures board at Palma Airport is now showing that all the Thomas Cook repatriation flights are delayed until 1am!
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. My colleague Sam Jones has sent this photo of the flights board.
The management of Thomas Cook are facing serious questions over the pay today, after the world’s oldest tour operator collapsed - triggering Britain’s biggest peacetime repatriation ever. It shows that flights to Stansted, Bristol, Manchester, Birmingham, Newcastle, Gatwick, East Midlands and Cardiff have all been pushed back beyond midnight, rather than leaving this morning.
As the first planes brought thousands of holidaymakers back to the UK, with heavy delays at some airports, accusations of ‘fat cat’ incompetence rained down on the company. However, the CAA website suggests most of the flights were leaving on time, so perhaps this is an error?
Thomas Cook travel chaos: firm's collapse leaves 150,000 stranded abroad – as it happened Sam also reports that the airport is busy, but not as hectic as yesterday. There are FCO staff on the ground, but they’re not allowed to talk to the press. So it’s a confusing picture....
Boris Johnson led the criticism, questioning why business leaders get away with paying themselves “large sums of money” as their business goes “down the tubes”. Thomas Cook staff, meanwhile, have been turning up for work despite not knowing if they’ll even get paid.
Speaking in New York, at the UN climate summit, the PM said: #ThomasCook information desk staff have turned up for work again this morning in #Palma One worker Antonia,says she has no idea if she’ll be paid and knows her job has gone, but she’ll work anyway until told otherwise..“What else can I do. I don’t want to sit at home + worry” pic.twitter.com/R5WhJMk206
“I think it is a bit bewildering that you can have 160,000 people stranded. Here’s the latest on Thomas Cook, from Associated Press:
“It’s not possible for me to know exactly what happened with the directors of the board of Thomas Cook and how it came about when they paid themselves x, y or z. The British government has flown home the first 14,500 people stranded by the collapse of tour operator Thomas Cook, and is expected to ramp up the repatriation effort to get all the 150,000 U.K.-based customers home in two weeks.
“But we’ve got to have a system in the future whereby we make sure that tour operators are in some way prevented from simply going belly up and then requiring the taxpayer to bring everybody home.” The Civil Aviation Authority said Tuesday the first batch of people were flown back after Thomas Cook ceased all operations Monday, leaving hundreds of thousands stranded around the world.
Estimates vary, but we’ve calculated that the three executives who led Thomas Cook over the last 12 years earned around £35m between them. It was still unclear how many of the 600,000 total that were traveling with the company as of Sunday would remain stranded. German authorities were still mulling a request for a bridging loan from airline Condor, a subsidiary of Thomas Cook.
Manny Fontenla-Novoa, who led the acquisition spree that saddled the company with more than £1bn of debt, was handed more than £17m in just over four years as boss of Thomas Cook, boosted by bonuses awarded for slashing 2,800 jobs following the merger with MyTravel. He quit in 2011 as the tour operator came close to collapse. The company’s Dutch subsidiary said all flights scheduled for Tuesday were scrapped and customers won’t be able to use accommodation they booked.
His successor was Harriet Green, who was paid £4.7m for less than three years plus a share bonus worth a further £5.6m. She handed a third of that award to charities after the deaths of two children from carbon monoxide poisoning in Thomas Cook accommodation in Corfu. Despite yesterday’s collapse, Thomas Cook workers have been turning up to work today.
Green also claimed £80,000-a-year to cover her hotel bills at the five-star Brown’s hotel in London, where she lived during the week. They’ll be assisting the Official Receiver, which was appointed to liquidate the company on Monday.
Peter Fankhauser, who was in charge when the company collapsed, was handed £8.3m, including £4.3m in bonuses. Back in the markets, sterling is lurching around after the Supreme Court dramatically ruled against Boris Johnson, over the prorogation of parliament.
Former Thomas Cook bosses under fire for excessive pay In a seismic ruling, the UK’s top judges have concluded that the suspension of parliament was ‘unlawful, void and of no effect’.
The government has already ordered a probe into the firm’s collapse, so the Insolvency Service will examine why Thomas Cook collapsed in a mountain of debt, and whether directors are to blame. This sent the pound rocketing back towards $1.25 (a level hit last week), before subsiding back as traders wondered what happens next.
Johnson and colleagues are also facing criticism, though, after refusing to help Thomas Cook by handing it a £200m lifeline. Some argue that this wouldn’t have addressed the company’s problems, but it appears to have scuppered rescue efforts led by Spain and Turkey. Opposition MPs are calling for Johnson’s resignation, as they digest the details of a stinging ruling from the Supreme Court:
UK ministers accused of sealing Thomas Cook's fate "It is impossible for us to conclude, on the evidence which has been put beforeus, that there was any reason - let alone a good reason - to advise Her Majesty toprorogue Parliament for five weeks" pic.twitter.com/HyQG4my6EL
Meanwhile, Civil Aviation Authority staff will continue to mobilise planes to get Thomas Cook’s customers home -- with around 150,000 holidaymakers abroad yesterday when the firm sunk. "Nowhere is there a hint that the Prime Minister, in giving advice to Her Majesty, is more than simply the leader of the Government seeking to promote its own policies; he has a constitutional responsibility" pic.twitter.com/3i4cN7X3aF
They’ve all been promised they’ll be brought home, but it could be a tricky process -- with plenty of delays and confusion reported yesterday. Have you been affected by the collapse of Thomas Cook? Share your stories
Also coming up today Labour MP Justin Madders has hit out at travel companies who have hiked their prices following Thomas Cook’s collapse.
While Thomas Cook customers trudge home, City traders will be watching the Supreme Court which will rule whether Boris Johnson misled the Queen to suspend parliament. He says a constituent is facing a 500% price hike to reschedule their honeymoon to Mexico.
Boris Johnson refuses to rule out suspending parliament again A constituent has contacted me after they lost their honeymoon booking for Mexico at the end of Oct with Thomas Cook. They tell me @TUIUK had a similar package advertised but overnight the cost increased by over 500%! I sincerely hope TUI are not profiteering at their expense!
New USA and German confidence data could be interesting too, as worries of an economic downturn swirl after weak factory production figures on Monday I hope people now look very closely at what @TUIUK and other travel companies are doing as it would be indefensible for them to capitalise on the demise of Thomas Cook in this way @MartinSLewis @EPortStandard @sherlock1968 @bbcmerseyside @GranadaReports @itvnews @BBCNews
The agenda Obviously there is a supply-and-demand issue at present, but companies should be wary of price-gouging....
9am BST: IFO survey of German business confidence Sam Jones, who is in Mallorca, has this update on flights from Palma airport.
9.30am BST: UK public finances for August Eight flights are due to bring Thomas Cook customers home to the UK from Palma airport in Mallorca today. Some have been rerouted, while others are set to leave as previously scheduled:
3pm BST: US consumer confidence for August The 10.25 to Stansted is currently set to take off as originally planned, as is the 10.35 to Bristol, the 10.45 to Manchester, the 11.10 to East Midlands, and the 11.30 to Cardiff.
The 11am flight from Palma to Gatwick is due to take off 15 minutes early, but will now land at Manchester.
The 10.50 to Birmingham has been pushed back to 20.15 and will now land in Manchester.
The 11am Palma-Newcastle flight has also been pushed back to 20.15 and will land in Manchester as well.
The CAA says transfers will be provided to all those landing at rescheduled destinations.
In other transport news, Uber has just been denied a new permanent licence to operate in London.
Instead, Transport for London has instead given the ride-hailing firm only a two-month extension to its licence, which is due to expire on Wednesday night.
It is the second time in two years that TfL has rejected Uber’s application for a full operating licence, following concerns it doesn’t meet its “fit and proper” test.
Here’s the full story:
Uber granted two-month extension to London licence