As Thomas Cook customers return home, blame game begins

LONDON/NEW YORK (Reuters) – Prime Minister Boris Johnson and unions questioned the part played by Thomas Cook’s richly rewarded bosses in the company’s demise on Tuesday, and asked why the state had to foot the bill for bringing tens of thousands of tourists home.

Some 16,500 holiday makers were flying back to Britain on the second day of the biggest ever peacetime repatriation, the Civil Aviation Authority said.

Running hotels, resorts and airlines for 19 million people a year, Thomas Cook had around 600,000 people abroad when it collapsed in the early hours of Monday morning.

It will need the help of governments and insurers to bring them back from places as far afield as Cancun, Cuba and Cyprus.

Speaking in New York, Johnson said tour operators should be insured against such debacles.

“I have questions for one about whether it’s right that the directors, or whoever, the board, should pay themselves large sums when businesses can go down the tubes like that,” he said.

“You need to have some system by which tour operators properly insure themselves against this kind of eventuality.”

Thomas Cook was brought down by a $2.1 billion debt pile, built up by a series of ill-fated deals, that hobbled its response to nimble online rivals. It had to sell three million holidays a year just to cover interest payments.

With the business draining cash, Chief Executive Peter Fankhauser found its lenders were no longer willing to step in. Fankhauser has earned 8.3 million pounds ($10.3 million), including 4.3 million pounds in 2015.

The Unite union said changes were needed to stop UK airlines collapsing at huge cost to the taxpayer, workers and customers.

“Ministers must legislate as necessary to allow UK airlines in financial trouble to trade in protective administration,” the union said. “Other countries do it as a matter of course. We should do it in the UK.”

The company’s British fleet was grounded immediately after the group became insolvent to comply with operating license requirements.

But its other airline operations in the Nordics and Germany, which are separate legal entities, were still flying on Tuesday.

In Spain, the country’s Acting Tourism Minister Reyes Maroto told reporters that the ministry has been in touch with German and Swedish authorities to ensure Thomas Cook subsidiaries continued to operate at least for the winter season.

British tourists staying in Sunrise Royal Makadi Hotel near the Red Sea resort of Hurghada in Egypt said they had no information about flights home.

Holidaymaker Andrew Vick, aged 55, said: “There are no representatives to talk to here at all, which is understandable because they have lost their jobs, so they are gone.

“It is just not knowing what to do next, that is the problem,” he said.

GOOD MONEY AFTER BAD

The British government said it was unwilling to “throw good money after bad” to bail out the company.

Reports on Monday said the Turkish government and a group of Spanish hoteliers were willing to support a 200 million pound rescue plan underpinned by a British government guarantee.

Business Secretary Andrea Leadsom, however, said the sum reported would not have kept the operator going for more than a couple of weeks.

“There are all sorts of rumors flying, the fact is that 200 million (pounds) was even an underestimate of what Thomas Cook would have needed just for the very short term, for the next week or two,” she told Sky News.

“Thomas Cook is sitting on trying to service 1.7 billion pounds of debt, and it would have been a waste of taxpayers’ money to be throwing good money after bad.”

Leadsom said she had asked the Insolvency Service to fast track an inquiry into the collapse, “just to make sure whether there has been in fact any wrongdoing, anything that could have been done differently that could have averted this disaster.”

Britain’s Financial Reporting Council said it was considering investigating Thomas Cook in cooperation with the Insolvency Service.

Thomas Cook’s demise sparked alarm at hotels where some customers have been asked to pay their bills again by out-of-pocket resort owners.

“I think the questions we’ve got to ask ourselves now: how can this thing be stopped from happening in the future?” Johnson said.

Emergency flights brought 14,700 people back to the United Kingdom on 64 flights on Monday, and around 135,300 more were expected to be returned over the next 13 days, Britain’s aviation regulator said.