U.K. PM asks why bosses got paid millions
NEW YORK/LONDON — After the collapse of Thomas Cook left tens of thousands of Britons reliant on the government to bring them home, Prime Minister Boris Johnson questioned whether the travel firm’s bosses should have paid themselves so much ahead of its demise.
Running hotels, resorts and airlines for 19 million people a year, Thomas Cook currently has around 600,000 people abroad and will need the help of governments and insurance firms to bring them back from places as far afield as Cancun, Cuba and Cyprus.
Speaking in New York, Johnson questioned why the state should be left responsible for the actions of handsomely paid directors and said tour operators should have some sort of insurance 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,” Johnson 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 British government said it was unwilling to “throw good money after bad” to back a bail out of 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.