Cost to the taxpayer of Thomas Cook collapse may approach £500m

Roots of travel agent date back to Leicestershire and 1841 NINE GOVERNMENT DEPARTMENTS STEPPED IN AS BUSINESS FOLDED

THE collapse of Thomas Cook last September is thought to have cost the UK taxpayer at least £156 million, according to the National Audit Office (NAO).

The total bill for those covered by the ATOL protection scheme – funded by industry members – could be closer to £500 million.

A new report from the NAO said it cost ATOL so much the Government would have to step in to help it, should another big holiday firm go bust.

The NAO said the cost of repatriation flights alone would eventually cost the Department for Transport (DfT) about £83 million, and there are other costs that are not yet even known.

The historic travel company – whose roots date back to Leicestershire in 1841 – collapsed on September 23, when all of its flight and holiday bookings were cancelled,

The business had debts of £1.7 billion and needed about £1.1 billion to keep going. Some 9,000 UK staff lost their jobs.

After the failure, the DfT called on the Civil Aviation Authority to repatriate about 150,000 customers stranded in 18 countries.

The government body is now reimbursing the CAA for the cost of passengers who were not covered by ATOL.

At that time that figure was estimated to be 40 per cent of passengers, but last month it was revised to 55 per cent, increasing the costs to government by £22 million.

The NAO said at least 14 organisations, including at least nine government departments, responded to support Thomas Cook passengers and staff.

Between September 23 and October 7, 746 repatriation flights from 54 airports were completed, bringing about 94 per cent of passengers back to the UK on date.

Thomas Cook staff were also brought home in any spare seats.

In a statement the NAO said the overall expense included the cost of keeping some parts of Thomas Cook their original scheduled running to assist with the repatriation.

It added: “The final cost to government of the repatriation may not be known for some time as, for example, the CAA will continue to receive for some months invoices for leasing planes, ground handling charges, and other services, with a proportion of these costs falling to Government.

“In addition to the costs associated with repatriating passengers, other parts of Government are expected to face costs of at least £73 million as a consequence of the insolvency of Thomas Cook.

“These costs include at least £58 million of redundancy and related payments to Thomas Cook’s former employees and at least £15 million for the costs of liquidating Thomas Cook, although the total costs of liquidation will not be known until the Official Receiver finishes his work.”

The NAO report said the CAA estimates the total exposure of the Thomas Cook repatriation and refunds to the fund that covers ATOL-protected passengers – the ATTF – will be £481 million.

ATOL holders pay it £2.50 per passenger for every package holiday they sell.