Thomas Cook Group faces serious risks to its brand image

A highly damaging story had developed following the way Thomas Cook dealt with the deaths of two children on a package holiday in Corfu. The personal tragedy also threatens the reputation of the organization

The developing story

Approximately ten years ago, a family holiday turned to tragedy.

Last week [13th May 2015] an inquest in Wakefield Yorkshire found a verdict of unlawful killing, and that Thomas Cook had failed in exercising its duty of care.

Thomas Cook responded by sending a letter of apology to the parents who claim to have seen it only through journalists covering the story.

According to The Guardian

According to The Guardian, The apology was reportedly sent by Thomas Cook’s chief executive, Peter Frankhauser, two days before it was revealed that the company received £3.5m in compensation from the owners of the hotel in Corfu where the tragedy occurred in 2006.

Christianne and Robert Shepherd, who were on holiday with their father and his partner, were overcome by fumes from a decrepit boiler.

Sharon Wood and Neil Shepherd said in a statement on Sunday that they had not received the travel company’s letter, and had only been shown it by reporters. “It is disgraceful that after all we’ve been through Thomas Cook are still putting us last in the equation.”

The popular press began to call for reparations from Thomas Cook to the family.

Background to the Thomas Cook group

Over the last decade the company’s fortunes have fluctuated wildly. The venerable firm of Thomas Cook was the prey of financial takeovers which resulted in considerable reconstruction, although the value of the historical brand has been recognized.

Harriet Green was appointed CEO in 2006 at around the time of the Corfu affair. Her leadership has been widely acknowledged as the outcome of an outsider successfully brought in with fresh ideas for rescuing the new company.

In earlier posts, I wondered whether she would be able to make an impact on the strongly entrenched corporate culture.

Hariet Green was replaced in November 2014 by Peter Frankhauser. The company stated that it needed someone more familiar with the leisure industry. Exit Harriet with a controversial golden goodbye, and promotion for the Thomas Cook insider from his role as Chief Operating Officer.

The sleeping crisis for the Company

For the company, attention to the Corfu hotel tragedy may have been replaced by concerns for more pressing strategic and financial difficulties. But the family fight for support began to attract media attention. Four years after the fatalities, [in 2010] the BBC had reported that:

a Greek criminal court [has]convicted the manager of the Louis Corcyra Beach Hotel in Gouvia and two other staff of manslaughter. The travel representatives of Thomas Cook were not changed.

Thomas Cook said in a statement: “What happened in Corfu was a tragedy and the thoughts and sympathy of everyone at Thomas Cook will always be with the family and friends of Christianne and Robert Shepherd.

“We have always maintained that this tragic accident was the result of a unique set of circumstances, none of which could be the responsibility of the company or [of its representatives]

“We believe that they should never have formed part of this court case.”

Further delays had resulted in appeals for the intervention of The Prime minister David Cameron before legal aid was provided.

An embarrassing development at the inquest

As the inquest proceeded this month, it emerged that Thomas Cook had received compensation from the owners of the hotel. At the same time, the company sent a letter ‘saying sorry’ to the parents who had themselves narrowly escaped death in the original incident. The parents claim they learned of the letter from journalists covering the story.

“We are all deeply shocked and saddened”

I have not [yet] been able to read the letter. The company is refusing to comment further, although through a spokesperson has announced how deeply shocked and saddened the company remains over the tragic events.

Questions for students of leadership and CSR

Can you ‘read’ the story in terms of dilemmas facing Thomas Cook and its leadership?

What might have been unintended consequences of the decision to remove Harriet Green as CEO?

How might you as a new CEO dealt differently with the emerging story?

Why?

To be continued

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