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Following the collapse of Thomas Cook, the British Prime Minister asks why bosses receive millions



New York / London (Reuters) – After the collapse of Thomas Cook left tens of thousands of Britons relying on the government to bring them home, Prime Minister Boris Johnson wondered if the bosses of the travel company should have paid so much before his death.

Thomas Cook queue passengers in front of the second day repatriation offices at Reus Airport, Tarragona, Spain, September 24, 2019. REUTERS / Albert Gea

Hotels, resorts and airlines operating for 19 million people annually, Thomas Cook currently has about 600,000 people abroad and will need the help of governments and insurance companies to bring them back from places far from Cancun, Cuba and Cyprus.

Speaking in New York, Johnson questioned why the state should remain responsible for the actions of well-paid directors and stated that tour operators should have some sort of insurance against such scruples.

"I have questions for one about whether it is right for directors or anyone on the board to pay large sums when businesses can drop pipes," Johnson said.

"You have to have some system in place to insure tour operators properly against this kind of event."

Thomas Cook was pulled down from a $ 2.1 billion pile of a series of unlucky deals that dug his reaction to agile online competitors. He had to sell three million holidays a year just to cover interest payments.

With the leakage of money from the business, CEO Peter Funkhauser found that his creditors were no longer willing to withdraw. Fankhauser won 8.3 million pounds ($ 10.3 million), including 4.3 million pounds in 2015.

The British government said it did not want to "throw good money after bad" to return a guarantee of the company.

Reports on Monday say the Turkish government and a group of Spanish hoteliers are ready to support a £ 200m bailout plan backed by a British state guarantee.

However, business secretary Andrea Leidoms stated that the reported amount would not support the operator for more than a few weeks.

"There are rumors, the fact is that 200 million (pounds) were even an understatement of what Thomas Cook would only need in a very short time, in the next week or two," she told Sky News.

"Thomas Cook is sitting and trying to service 1.7 billion pounds of debt and it would be a waste of taxpayer money to throw good money after bad."

The demise of Thomas Cook, announced in the early hours of Monday, sparked anxiety in hotels where some customers were asked to pay their bills again by out-of-pocket resort owners.

"I think the questions we need to ask ourselves now are: how can this thing be stopped in the future?" Johnson said.

"How can we ensure that tour operators take the proper precautions with their business models that do not lead to a situation where the taxpayer, the state, has to intervene and bring people back home?"

flights returned 14,700 people back to the UK on 64 flights on Monday, and about 135,300 more are expected to be returned in the next 13 days, the UK aviation regulator said.

"I just have to get over it," says Anthony Tents, a Thomas Cook client from central England who is trying to get home from Majorca in Spain. "We're going home, but just some of the people have lost their jobs, it's awful, isn't it?"

Seventy-four flights were planned on Tuesday to bring back 16,500 people. Over 1000 flights are planned.

Slideshow (8 images)

“Repatriation of this magnitude and nature is unprecedented and unfortunately there will be some inconvenience and disruption for customers. We will do everything we can to minimize this as the operation goes on, "said Richard Moriarty, Chief Executive Officer of the British Civil Aviation Authority.

"We want people to continue to enjoy their vacation, so we will bring them back to the UK on their original departure day or very shortly thereafter."

Written by Guy Fallbridge; Editing by Mark Potter

Our Standards: Thomson Reuters Trust Principles.

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