UK transport secretary Grant Shapps has defended the government’s decision not to fund a possible rescue of Thomas Cook Group, but has stressed that options need to be examined in order to avoid the problems of a sudden airline failure.
Shapps told the lower house of the UK parliament on 25 September that the “perilous state” of the tour operator’s business, notably its huge half-year loss to March 2019, meant there was “no guarantee” that a government injection of public funds would have secured the future of the company.
He says such a move would have amounted to throwing “good money after bad” – following which the government would then have still needed to pay the costs of customer repatriation.
Thomas Cook Group ran into difficulties trying to expand, particularly with retail outlets, says Shapps, and he describes its failure as an “extremely sad moment” for the 178-year-old company.
“We’ve never had collapse of airline or holiday company on this scale before,” he adds, stating that there is a need to understand whether there was any failure in “duties of stewardship”.
Shapps also says there is a need to look at options for allowing airlines to wind down “in a more orderly manner”, to avoid the necessity of setting up a “shadow” airline such as that established under ‘Operation Matterhorn’ to repatriate Thomas Cook customers.
A review into airline insolvency has already been carried out, and was published earlier this year, with recommendations on such measures.
While a repatriation fleet created following the collapse of Monarch Airlines two years ago was able to “closely match” the failed carrier, Shapps says the situation with Thomas Cook has been “a lot more challenging” with recruitment of a variety of aircraft types which has resulted in complications with bringing passengers back to their original departure airport.
Shapps says the government has entered discussions with third parties with a view to recovering some of the costs of the repatriation effort.