Here's a startling fact about Thomas Cook: in September 2007, the company had cash of £394m. Today it finds itself begging its banks for an extra £100m to add to a debt that was about £900m in September this year and could reach £1.5bn by the end of December as seasonal outflows hit. What happened?

The rise and rise of budget airlines and the growth of Expedia and other online travel agents didn't help, as is well known. Less appreciated is the extent to which Thomas Cook, under chief executive Manny Fontenla-Novoa, shot itself in the foot via an appallingly timed share buy-back and an acquisition spree.

The annual report for 2008 records the buy-back: 120m shares bought at an average price of 241p each between March and October of that year at a cost of £290m. For the same sum today, you could buy all Thomas Cook's shares three times over.

On the acquisition front, Fontenla-Novoa was busy looking for "opportunities that can accelerate our journey by capturing growth and value through mergers and acquisitions," as the 2010 annual report put it. A flurry of deals in 2008 brought in Jet Tours (£56m), Canada's TriWest Travel (£57m), Hotels4U (£22m) and Gold Medal (in two batches: £25m plus £47m). Öger, a German operator, arrived for €30m (£25.9m) in 2010.

All the while, Thomas Cook was spending heavily internally. Last year's annual report showed a jump from £79m to £266m in net expenditure on fixed assets and intangibles. Some £66m alone was to buy two aircraft which had previously been leased. The main reason for the rest of the increase, said the report, was investment in IT and an "online travel agent proposition".

The steady rise in the debt position over the past three years is startling: net debt was £292m in September 2008, £675m in September 2009 and £804m in September 2010. Moral of the tale: tour operators should be financed conservatively. Given the number of high-profile failures over the years in this industry, you might assume the lesson had been learned. Not at Thomas Cook.