Thomas Cook’s Peter Fankhauser says 2007 merger with Airtours ‘could have been done better’ but it was right to consolidate. By Lee Hayhurst
Thomas Cook’s recent troubles began with mistakes made in the merger with Airtours in 2007, according to chief operating officer Peter Fankhauser, now the group number two to chief executive Harriet Green.
Speaking at a Travel Weekly Business Breakfast last week, Fankhauser said Thomas Cook was right to grasp the chance to consolidate in 2007. But he said: “What we did with Airtours was not good enough. The whole integration went completely wrong.
“We lost so many passengers after the merger, and Airtours had a good product of its own. We could have done much better.”
Fankhauser, who ran Thomas Cook’s German business at the time, admitted he had doubts about the merger, which preceded Tui and First Choice combining to form Tui Travel by several weeks.
He said: “Whether Airtours was the right partner was, for me, a big question mark and it turned out
to be a big question mark. But it was what it was.
“Sometimes when you are not an owner of a business but a manager you have to say that’s how it is and you make the best of it or you go. And I decided to stay.
“At the same time the whole head office moved from Germany to the UK. But I realised it is sometimes better to be a lord in the country than a prince in the king’s castle.”
The new Thomas Cook Group was listed on the London Stock Exchange. But Fankhauser said the period after the merger proved tough, with external shocks impacting the business, including the financial crisis and recession of 2008-09 and the Icelandic volcanic ash crisis of 2010.
Three profit warnings in 12 months and a delayed end-of-year trading announcement in 2011 led to alarming press headlines and a fall in Cook’s share. Former chief executive Manny Fontenla-Novoa quit the business and, since 2012, Cook has undergone major restructuring under Green.
Fankhauser agreed that when the company was in the depths of its troubles, a focus by City analysts on the UK business made the situation appear worse than it was. But he said: “It’s a fact of life that if you are listed in London, then all the analysts are from London.
“We have a lot of investors now on the Continent and in the US, but analysts’ comments mainly focus on us as a UK company. If we were listed in Frankfurt it would be exactly the same in Germany.”
Fankhauser said there was sympathy towards the plight of the UK business in Thomas Cook’s German operation as the latter’s poor performance had threatened the group’s existence in 2003-04.
It was Fankhauser who had undertaken restructuring in Germany at the time, having joined Cook in 2001 from German tour operator LTU where he had also engineered a turnaround. Fankhauser previously spent a decade as an executive at Kuoni.
He said: “It was with big sorrow we were looking over the Channel. It was a real struggle for us to have some part of the group that was really sick.”
But he admitted he did not initially jump at the chance to move to the UK when Green asked him to join her. “Initially I said the UK was not really a place to be. But you can’t just complain. If you get the chance to fix it, you need to do something about it,” he said.