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Thomas Cook: Boris Johnson defends govt decision not to step in
Prime minister Boris Johnson has defended the government’s decision not to step in and save Thomas Cook from liquidation, despite a request from the embattled operator for £150 million.
Cook collapsed on Monday morning (23 September) leaving more than 150,000 passengers requiring repatriation and some 9,000 UK-based staff out of work.
As per the failure of Monarch Airlines in October 2017, the CAA is coordinating a repatriation effort, which it said would bring home stranded passengers “regardless of their Atol cover”.
The Department for Transport (DfT) said the operation would be modelled on the “successful repatriation of passengers after the collapse of Monarch Airways [sic]”, which came in at a final cost to the taxpayer of about £50 million.
Ministers believe the Cook repatriation operation will be “about twice the size”.
At the weekend, Cook held eleventh-hour talks with key lenders and government officials to secure a further £200 million funding to unlock the £900 million rescue deal agreed earlier this year with its largest shareholder Fosun, as well as its banking partners, stakeholders and noteholders.
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Johnson, speaking to reporters in New York, said while it was a “very difficult situation”, any form of bailout would create “a moral hazard” when it came to any future commercial difficulties faced by similar companies.
The PM confirmed a request was made for “subvention” of around £150 million. “Clearly, that is a lot of taxpayers’ money,” said Johnson, who also hinted at exploring how bankruptcy protections could be reformed.
“We need to look at ways tour operators – one way or another – can protect themselves from such bankruptcies in the future,” said Johnson. “Clearly the systems we have in place [must] make sure companies such as Monarch or Thomas Cook don’t in the end come to the taxpayer for help.”
Johnson said the state, “one way or another”, would likely have to step in in future, adding one solution might be to incentivise company directors to “sort such matters out”.
The DfT said: “Thomas Cook’s financial problems are substantial, long-standing and well-documented; government financial assistance would not have resolved them.”
James Chapple
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