Thomas Cook’s comms team was battling in ‘crisis mode’ for several months to keep the UK’s oldest travel company afloat until a failure to secure a last-ditch government bailout scuttled talks and the business.
In an exclusive interview with PRWeek, Thomas Cook's former group comms director Alice Macandrew has revealed publicly, for the first time, the scale of her team’s effort to hold up consumer and supplier confidence for long enough to allow a critical recapitalisation deal to get done.
In the end, Thomas Cook failed to secure a funding arrangement that would wipe its debts, with the Government’s decision against a bailout evaporating hopes.
In the months leading up to the collapse, a team of 20 comms professionals across consumer, corporate, IR, public affairs and other disciplines worked around the clock in an effort to rescue a business with £1.7bn of debt.
Their role essentially was to maintain consumer and supplier confidence for long enough to get a deal across the line with virtually no budget and very little agency support, under intense pressure from investors, the media and other stakeholders, and with liquidity in the business getting tighter all the time.
Macandrew, who sounded emotionally and mentally exhausted, told PRWeek the pressure and hours her team had to work had been relentless.
"We have worked in crisis mode for months. I’ve had members of my team under incredible pressure and scrutiny for months now," she said. "That’s really tough, knowing how complex the deal was and knowing you needed to get it done in order to save the business.
"This is not an outcome any of us ever wanted, or one that I planned for. My job was to communicate a successful outcome and to believe in that successful outcome for as long as we could...we were like a lighthouse for the business, and for stakeholders to bring them along with us."
The team had worked seven days a week leading up to the failure in the early hours of Monday, 23 September.
"Last weekend, there were loads of us that didn’t really sleep and we were up all night on Friday (20 September), Saturday, Sunday and Monday. The initial response [of the corporate failure] is shock and you’re out of a job, and the whole world’s media has gone mad and everybody is looking to you for an answer.
"You have to make it through that with your team when none of them have a job, everybody is blaming everybody else and you are stuck in the middle. It’s absolutely horrific."
How did Thomas Cook get here?
The group has been struggling since 2012 when it survived a "near death experience". Macandrew was hired in 2015 and set about building a team from scratch over 18 months, which combined all disciplines of comms.
"A breadth of consumer experience, strong reactive function and sustainability, and a proper heavyweight internal comms function was really critical in this business," she recalled.
"Right from the very start, we didn’t have money; this is a business that had very high levels of debt. When we came into the business, it’s not like it was firing on all cylinders."
This meant Thomas Cook couldn’t draw upon agency partners and focused on building talent in-house. Macandrew established a heavily integrated team with corporate and financial comms sitting in the same team as consumer, IR, and hotel and resorts – which is more brand focused.
The aim back then was to drive the business to change fast enough without a lot of resources. For years the travel operator hadn’t adapted sufficiently to the digital era and disruptors including budget airlines and accommodation apps like Airbnb. Thomas Cook sought to launch new hotel launches, "bold" sustainability projects and, importantly, drive internal cultural changes that would place customers "back at the heart" of the business.
"In lots of respects we did," Macandrew said. "By the summer of 2018, we were leading the sector in terms of our brand reputation and the coverage we were getting. We had done a holiday report, sunbed campaigns, and a sickness campaign, for which we won a PRWeek award. We did very effective reappraisal pieces around our new hotels, we’d found ways of leading the industry.
"But the reality is that trading remained tough, particularly the challenge of trying to change a business when you have very high debt and not a lot of cash in a poor trading year ."
Last year was brutal for Thomas Cook on several fronts. Although it entered spring in "a strong corporate affairs and bookings position", an unusually hot summer – at the time the hottest on record – combined with Brexit uncertainty and the ongoing challenges from cut-price online competitors hurt holiday bookings.
Thomas Cook's consumer PR work in Spain had paid dividends in bookings until the 2018 heatwave kept UK travellers at home (Photos: Getty Images)
A race against time
These factors impacted the travel sector generally, but hit Thomas Cook harder than most.
It is estimated the profit from three million of Thomas Cook’s 11 million holiday bookings each year services interest payments alone.
"We had liquidity/cash getting tighter and tighter – there’s only so long you can keep confidence and manage your cash flow," Macandrew pointed out. "It was a race against time."
Following profit warnings in autumn last year, negative press about the group’s audit – its auditor at the time E&Y is being investigated by the Financial Reporting Council – led to a fall in Thomas Cook’s share price.
"Since last September, it has been extraordinarily challenging, corporately," she said. "The approach we have taken throughout the whole of last year is to be as transparent as possible. It was important to project a clear strategy and how we were going to finally tackle the debt, recapitalise the business and put it onto a more stable financial footing.
"We sought to acknowledge the financial challenges, but set a clear direction of travel and put real momentum behind that strategy."
Thomas Cook relies heavily on the trust and confidence of its customers, thousands of suppliers and employees. For the comms team this meant doing an effective corporate comms job of being transparent, while at the same time projecting confidence to the consumer media, travel media and, critically, its supply chain.
This included meeting with key destination governments to explain what their strategy was and how the business planned to right the ship, as well as proactive consumer comms activity on social media and 20 new hotel launches to build positive press and momentum.
"If any one of them lose confidence in the direction the business is taking, then the business falls over. It becomes a self-fulfilling prophecy," Macandrew explained.
"The single biggest challenge we’ve had in the last year has been to drive momentum behind a strategy to fix the business so that there was enough confidence from multiple stakeholders to give us the time to do that deal."
This involves "managing the noise" – negative press coverage that could scupper confidence.
"When we announced the recapitalisation when we came out of half-year results May, the shares were absolutely pummelled...the Financial Times wrote that we were a business that was about to topple over – the thing that the comms team needed to do was really proactively communicate," she said.
Thomas Cook's collapse left 150,000 customers stranded abroad. (Photo: Getty Images).
A mountain too high
Corporate affairs has always had a seat at the top table at Thomas Cook and was increasingly important during its recapitalisation efforts. However, the odds were firmly stacked against the business due to an exceptionally complex situation involving multiple stakeholders and markets.
Aside from keeping shareholders on board, Thomas Cook needed to ask its lending banks – 17 of them – to wipe out the debts that it owed. It had to request the same of its bond holders. In total, this added up to £1.7bn worth of debt that it needed to be turned into equity in the recapitalised business.
On top of this, Thomas Cook needed banks, bondholders and shareholders to tip in an additional £900m into the new business.
"This is not a traditional M&A. Every single party around the table had to give something up and [we had to get] them all into a room to agree highly complex transactions in a very short space of time," Macandrew said. "New money had to come into the business in October for it to remain solvent."
It panned out that some of that new money would need to come from the Government, in the shape of a bailout package worth £200m.
Although Thomas Cook has an open relationship with the Department of Transport and the Civil Aviation Authority, Macandrew concedes management knew financial support from the Government was always going to be a stretch and "a last resort".
"Because the implications of the deal and failed business were serious, we had to at least make the proposal," she said. "They said ‘no’. We had a series of high-level meetings and know it was considered at the highest level, but they said ‘no’. That’s the point when the deal collapsed."
The Government made it clear that it wouldn’t support a Thomas Cook bailout, saying it would be akin to "throwing good money after bad".
In explaining the Government's position, transport secretary Grant Shapps (below), said investing in Thomas Cook would only have delayed its inevitable collapse.
"I think if we’d seen a business that clearly had hot prospects and all it needed was something very simple and then it would carry on; that would be very different," he said. "I don’t think that there was a route through to pumping in taxpayers’ money and then actually avoiding today."
Pressure on Thomas Cook continued to build in the week leading up to collapse and by the Friday, suppliers and consumers were pulling away while employee confidence had plummeted.
"We knew the minute that the noise built up, there was a tipping point where it became almost impossible for us to hold consumer and supplier confidence long enough to seal the deal," Macandrew pointed out. "As soon as people start writing that you are at risk of going insolvent...when those headlines started we had a matter of days to save it."
In the background, and as early as August, a few of Macandrew’s senior comms lieutenants had been tasked with starting to think about contingency plans, although this was very much on the back-burner (and highly confidential) until about mid-September.
"It’s almost impossible to contingency plan while trying to get a deal across the line," Macandrew explained. "As a comms function, I might have been doing it behind the scenes with a couple of my team, but the job of the majority had to be getting a deal across the line and making sure we were doing all we could to keep the wheels on the business and the deal."
By the Thursday before the collapse, the comms team had placed more resources on contingency planning, working day and night until Sunday evening.
The team had to prepare for all eventualities, things such as if deal didn’t cross the line: which social media channels would need to shut down immediately, what would be passed over to the CAA, who would work for the CAA’s Operation Matterhorn, and what would be the core role of the team.
"In a situation like this, the normal roles go out the window. Up until Saturday, the corporate press office were continuing in their roles. They had to manage a huge volume of media calls and do prep for four, five or six different releases, dependant on the outcomes. We were constantly juggling different scenarios throughout the last few weeks."
Thomas Cook staff want to be paid out and for management to be investigated over their role in the collapse. (Photo: Getty Images).
Dealing with the fallout
From Monday, the focus has firmly shifted to managing the fallout with the media and from a corporate perspective, explaining what had happened and trying, where possible, to defend management.
The full complement of UK-based comms professionals were kept on for a week after the business was placed in administration, and this was followed by phased departures.
Macandrew describes this as an insidious position to be in: "I did not build this team to clear up the mess; I created this team to create something.
"There’s a core team here who are absolutely best in class. Because it’s a small team we have staff who can do proactive and reactive comms in the same breath, and they have experience across all disciplines.
She concluded: "In my view they are some of the best communicators in the job market. They ran one of the best comms functions in the sector and I hope people look beyond the business falling over and see there were brilliant communications in that period at the same time."
Macandrew and her team can leave the Thomas Cook wreckage with their heads held up high. Their comms efforts guided Thomas Cook through unimaginable turbulence and scrutiny, but years of poor management had left the business on a journey that was too far out of reach in the end.