Boris Johnson says he refused R2,7 billion bailout for Thomas Cook because it risked 'moral hazard' for other firms
- Boris Johnson refused to bail out collapsed travel firm Thomas Cook.
- The company had asked the UK government for £150 million (R2,7 billion), which the prime minister refused due to the "moral hazard" it would cause for other firms at risk of collapse.
- The company warned earlier this year that Brexit had reduced demand among UK holidaymakers.
- The UK government has committed to repatriating an estimated 150,000 UK tourists at a cost of hundreds of millions of pounds.
- Stranded passengers can find more information at the UK Civil Aviation Authority's website, or its 24-hour hotline: 0300 303 2800 from the UK and Ireland, and +44 1753 330 330 from overseas.
- Visit Business Insider's homepage for more stories.
Hundreds of thousands of tourists have been left stranded after Boris Johnson refused to grant the collapsed travel firm Thomas Cook a £150 million (R2,7 billion) bailout.
Talks between the United Kingdom government and the 178-year-old company broke down on Sunday, putting 22,000 jobs at risk and triggering the biggest repatriation effort in modern history.
Roughly 600,000 customers of the firm, including 150,000 Brits, have been affected by the collapse.
The company had warned earlier this year that Brexit was causing consumers to put off their holiday plans.
Johnson said on Monday that all UK customers would be brought back, with total costs to British taxpayers expected to total hundreds of millions of pounds.
However, asked about the crisis, the UK prime minister insisted that it would have been wrong to bail out the company.
"It is perfectly true that a request was made to the government for a subvention of about £150m?," Johnson told reporters during a flight to the UN General Assembly in New York.
"Clearly, that is a lot of taxpayers' money and sets up, as people will appreciate, a moral hazard in the case of future such commercial difficulties that companies face."
He said that executives at the company must be held responsible for the firm's collapse.
"One is driven to reflect on whether the directors of these companies are properly incentivised to sort such matters out," he said.
The opposition Labour party said the prime minister should have intervened to prevent the firm's collapse.
"To just stand to one side, I just don't think that's wise Government," Labour's Shadow Chancellor John McDonnell told the BBC, adding that he believed that government had an "ideological bias" against any form of state intervention.
Receive a daily email with all our latest news: click here.
Also from Business Insider South Africa:
- Take a look: this is the 'Aerotropolis' that Durban’s government hopes will bring in R1 trillion in investment
- The US and Saudi Arabia are searching for a 'smoking gun' among wrecked weapons that will conclusively link Iran to the attacks on Saudi oil sites
- Chinese journalists will have to pass a government test on Marxism and President Xi Jinping to be granted press passes
- Flight attendants cringe when you order tea or coffee — and the reason is pretty gross
- 'Sorry about that': DStv streaming drops Springbok fans during first Rugby World Cup match against New Zealand
- Donald Trump’s new national security advisor reportedly came to SA to study apartheid – and speaks Afrikaans fluently
- A fake interview with Vladimir Putin demonstrates how convincing deepfakes could be created in real-time in just a matter of years