Why saying sorry is so difficult

Thomas Cook have found themselves in a furore over the death of two children at a hotel in Corfu. Their real sin – in the eyes of the parents and the tabloid press – seems to have been that they did not express much contrition at the time and have steadfastly refused to apologise since then. The fact that they received a substantial pay-out from the hotel to cover damage to their reputation and PR expenses has, quite understandably, just added to fuel to the fire.

At the time of the incident in Corfu, Thomas Cook was in the hands of an arrogant and incompetent management who were running the company into near bankruptcy and awarding themselves ever-increasing salaries and bonuses. Their poor behaviour in this case was simply part of an overall malaise in the company. These people departed a long time ago and the person brought in to bring the group back into shape has also left which, if judged by the stockmarket’s reaction, was a very positive move. The company is now, finally, in more sensible hands but the new management will really have their work cut out to rescue this particular situation.

The standard PR advice when a company is involved in an event where people are killed or injured is that the CEO should make a full and frank statement of contrition. CEO’s are human too; they have wives and children and have not set out to hurt their customers. In many cases, they will be genuinely shocked and upset at what has happened.

However, despite the PR advice, they will be firmly told by their company lawyers that they must not say anything that could be seen as accepting even a tiny bit of liability. The company’s insurers will probably back this up with a threat to suspend cover if the CEO says anything remotely prejudicial to a possible legal case.

In many instances, a CEO is tied. He knows what he should say – and probably want to say – but cannot.

I was actually rather shocked at the reaction of the CEO of Lufthansa to the Germanwings crash. Within days of the accident, and well before even a preliminary report had been prepared by official investigators, he appeared to be accepting some of the blame. In one way, his reaction was spot-on – it was quite clearly honest and heart-felt. He was as shocked and upset as anyone. The company’s sensitive behaviour was almost a text book example of how to behave in such an event. But had he cleared his comments with his insurers or did he just feel it was worth the risk?

Thomas Cook will have to pay for the sins of their previous management but properly-managed, honest companies have a huge problem balancing the opposing demands of their PR advisers and their insurers.

Thomas Cook – Rewards for Failure

Readers of Inside Traveller will know that for some years we have been warning about the lowering of standards at Thomas Cook. A name that once symbolised quality had become tarnished long before its financial problems became clear. Virtually every indicator suggested the company was being badly-managed and in a downward spiral – the sinking share price, the poor time-keeping of the charter airline compared with competitors, the level of complaints about holidays and even the productivity of the charter fleet (their aircraft fly fewer hours per day than competitors). Life is not easy for package holiday companies because much of their market is disappearing but, in the same period, TUI has done well financially and enhanced its reputation for quality.

It has also been clear that much of this was the fault of the boss, Manny Fontenla-Novoa. His answer to the company’s problems seemed to be constant management changes and a buying spree of other companies which led to huge borrowings. Crucially, little was done to integrate the many new companies purchased so the group did not gain as it should have done. Other travel groups have made great strides in buying up names, integrating the back-office whilst maintaining a separate brand and customer identity.

So, what was the Board’s reaction when Mr Fontenla-Novoa’s did not seem to be working?

They simply paid him more! In the last four years, he received an extraordinary £15m in pay and bonuses. Three years ago, institutional investors protested against a £5m bonus paid but this did not stop the Thomas Cook Board and its Remuneration Committee who continued to award further generous bonuses.

The acting Chief Executive has now admitted that the company was badly managed, That is an understatement. There are vague threats to make some form of claw-back of money paid but that seems unlikely to succeed.

A more appropriate route for claw-back would be to pursue the members of the Remuneration Committee and the Non-Executive Board members. What on earth were they doing? It is one thing giving a man you trust more time to follow a strategy – even if many outsiders can see all too clearly that it is going wrong – but continuing to shovel money at the people responsible before there is even a glimmer of light at the end of the tunnel is highly irresponsible.

Now, Thomas Cook is effectively at the mercy of the banks. Rather than let the company go bankrupt, it is better for them to organise an orderly sale of most of the parts. Whether anything will remain at the end for shareholders is anyone’s guess.

It is easy to vilify Mr Fontenla-Novoa but the real guilty party in the destruction of Thomas Cook is the Non-Executive Directors who so obviously failed to protect the company and its shareholders. 

Thomas Cook – Time for a new broom

Thomas Cook hit the financial headlines last week because of yet another profit warning. The City has been promised an improvement in the company’s performance for some time but it seems that it is still some way away. Meanwhile, the company will yet go through a strategic review and change its middle management.

That sounds like the wrong answer.

Manny Fontenla-Novoa initially did a good job in combining a number of companies around Europe, the ruins of the MyTravel organisation and various other UK brands including Thomas Cook but the group has long since run out of steam. The City can study the figures as much as it likes but there is an easy way to judge Thomas Cook. It might be simplistic but so often it is true that good companies please their customers and make profits. Bad companies do not.

Thomas Cook has traded on the good name of the venerable Thomas Cook but has often appeared a little underhand and downmarket – rather like the old MyTravel.

- Sadly, we were not surprised that it was Thomas Cook who were named as the company increasing its profit margins on its exclusive hotel deals for the Olympics.

- Nor is it a surprised to see that the Thomas Cook airline is consistently less punctual than its two rivals, Thomson and Monarch,

- Thomas Cook is blaming the Arab Spring for the current profit warning. Yet they were much more aggressive with customers who had booked holidays and wanted to change them than TUI. And TUI have not issued a profit warning.

- Thomas Cook’s fuel surcharges are substantially higher than TUI’s – TUI hedged their fuel and Thomas Cook did not.

We could go on – and on.

There is simply too much evidence that Thomas Cook is badly-managed – and that means a change is needed at the top, not a shake-up of middle management.

Until that happens, and a new broom gets to work, if you want to use one of the major tour operators, use TUI.

The Decline and Fall of Which?

A publication that is designed to stand up for the consumer and highlight the wrongdoings of large companies needs to be very certain of its own ethics. This might have been the case in the past but, nowadays, Which? magazine seems just a tawdry commercial publication intent on publicising its “sensational” findings – and boosting its sales as a result.

The organisation has just given wide publicity to the results of its annual travel survey which showed the small company, VFB, at the top of the list for customer satisfaction and Thomas Cook and Cosmos near the bottom.

The Which? survey was based on the responses of just 4,500 readers, of whom 308 had taken a holiday with Thomas Cook. According to Cook’s, this is around 1 in 20,000 of the company’s total customers. In other words, it is a completely meaningless sample.

Not only that but, as should be obvious, it is a pretty biased sample. It really is no surprise that the independent-minded, middle-class readers of Which? would prefer a small independent company to one of the big package companies.

Inside Traveller would never be so foolish to run a survey of our own readers and then publish the results as if they were representative of the whole travelling public. Like Which?, we are a niche publication and would hope to find our readers had more exotic tastes than the main market.

If Which? wish to run a survey and publish the results to their own readers then that is fine – it is probably fair to say that many other Which? readers will prefer a company such as VFB to Thomas Cook and Cosmos. What is totally unacceptable is that they then publicise these findings as if they are representative of the whole travelling public when, clearly, they are not.

This sort of nonsense does not do the travelling public any favours and merely shows how far Which? has fallen in its standards.