BALPA Brands Lack Of Government Thomas Cook Funding A “National Scandal”

The British Airline Pilots Association (BALPA) has published a press release raising questions about the collapse of Thomas Cook Group and its subsidiaries in the UK, while Germany’s Condor has received six months of funding from the German government.

A Thomas Cook Jet
The handling of the Thomas Cook Group collapse has raised a number of concerns. Photo: Fabrizio Gandolfo via Wikimedia Commons

In a press release dated 25th September, the General Secretary of the BALPA, Brian Strutton, raised concerns about the UK government’s response to the Thomas Cook Group collapse.

“Why couldn’t the UK government give the same kind of bridging support as the German government when it was well known that Thomas Cook had a Chinese buyer lined up?”, he said.

Mr. Strutton was referring specifically to the £350 million bridging loan given by the German government to Thomas Cook’s German subsidiary airline, Condor.

The money is intended to keep Condor afloat while it arranges a takeover deal. Condor was a profitable arm of the Thomas Cook Group, so there does appear to be significant interest in a takeover if a price can be agreed upon.

Earlier this week reports emerged that US equity firm Indigo Partners, which also owns stakes in a number of other airlines, including Frontier and Wizz Air, was interested in Condor. But the Condor rescue package has caused controversy for a number of reasons.

On Thursday, video footage emerged of Condor staff and senior management celebrating the announcement of the £350 million government bailout. At the same time, over 21,000 other employees of the Thomas Cook Group had lost their jobs, raising anger at the special deal cut to save Condor.

A Condor Boeing 757
Condor has received a bailout from the German government. Photo: Milad A380 via Wikimedia Commons

The main root of the issue comes from the fact that, whilst being a partly owned subsidiary of Thomas Cook Group, Condor is a German company.

As such, it was protected from Thomas Cook Group’s insolvency proceedings and was able to negotiate its own deal with the German government. That leaves the question of why the British government refused Thomas Cook Group a bailout.

The UK government’s handling of Thomas Cook

Unfortunately for the thousands of Thomas Cook Group employees and its customers, the UK government decided against providing bailout money before the company reached the end of the road.

The Air Travel Organiser Licence (ATOL) scheme is expected to have to pay £420 million to refund future bookings with Thomas Cook Group. The marked difference in the German and British government responses has drawn criticism.

A Thomas Cook Airbus A321
Thousands of employees in the UK and abroad have lost their jobs. Photo: Tony Hisgett via Flickr

A bailout for Thomas Cook Group would have to have been much larger than the one given to Condor, but there are reports that the British government blocked investment offers from the Turkish and Spanish governments which could have made a difference.

Criticism of Thomas Cook Group’s upper management

While Thomas Cook Group collapsed, its chief executive, Peter Fankhauser, recently received £4.6 million in bonuses and stocks.

The fact that he received such a large bonus while the company went under and many thousands lost their jobs has led to suggestions that the bonuses were “undeserved and unwarranted”.

As a result, there have been calls to take Fankhauser’s bonuses away, although most of it was paid in stock which is now worthless.