Sigh

EU competition regulators on Monday approved a 380-million-euro German bridging loan to Thomas Cook’s German airline Condor, saying the measure would ensure the continuation of air transport services.

Condor ran into a liquidity problem after its parent company and the world’s oldest travel firm Thomas Cook collapsed last month.
….

In other words, the UK government need not have let Thomas Cook fail. It could have guaranteed a loan that meant it did not have to fall to ABTA, which is guaranteed by the UK government, to spend more than the value of the required loan guarantee to repatriate vast numbers of people who could have instead continued their holidays uninterrupted whilst an orderly reorganisation of Thomas Cook could have been arranged. And EU law permitted that.

It’s often said that the EU obstructs commercial matters to promote competition: the reality is it very clearly takes reality into account. This is a case in point. It’s the UK government and free-market ideologues who promote the idea that the EU is a problem. Very often it is not. And the left should take note.

No.

That a parent company goes bust does not mean that the subsidiary is also bust. That T Cook went bust does not mean that all subsidiaries of T Cook are bust.

Further, that Condor is perhaps viable but that T Cook airline is not are different issues. Whether or not T Cook could have been bailed out by the UK government depends upon whether T Cook was perhaps viable. With that £3 billion hole perhaps not.

Whether or not T Cook airline could have been subsidised depends upon whether T Cook airline was perhaps viable or not.

That a possibly viable subsidiary got support doesn’t mean that a possibly not viable one would be legally able to have the same.

But then, you know, Snippa, accounting, the law……

27 comments on “Sigh

  1. Ritchie: Making profit should not now be the primary goal of a business: being net-zero carbon should be

    Also Ritchie: Let’s financially subsidise airlines and holiday companies lol

  2. No doubt in his ideal scenario Thomas cook would be nationalised and holiday destinations limited to Cuba, North Korea and Albania. Travel of course would be by horse and cart and row boat across any stretches of water.

  3. I’m not about to trust the Potato for any business analysis, and Tim’s valid point notwithstanding, I am puzzled that £600 million was spent (and irrecoverable and hence definitely lost) repatriating holidaymakers, when a loan of £200 million (which, OK, may have been lost but could have been recovered) would have allowed a takeover deal to go ahead, or even to allow a more measured run-down of the business. Hmmm…

  4. What the EU allows the French and German Governments to do is one thing. Amazingly, what the British government is allowed to do under the same rules may be a tad different.

  5. Of course next week people flying away on holiday is destroying the planet, so one wonders what in the mad mad spud world a bailed out Thomas Cook would actually do.

  6. Nautical Nick said:
    “I am puzzled that £600 million was spent (and irrecoverable and hence definitely lost) repatriating holidaymakers, when a loan of £200 million (which, OK, may have been lost but could have been recovered) would have allowed a takeover deal to go ahead, or even to allow a more measured run-down of the business. Hmmm…”

    Others may know better, but here’s my guess:

    a) The company was actually under by a lot more than £200m (wasn’t it £3bn?)

    b) Therefore £200m was only to keep it going for a few days while they tried to sort out a takeover. However there’s no guarantee that a takeover would happen, or be successful, and so there was a high chance that the government would put in the £200m and be back in the same position (being asked for more money / guarantees, or having to bring home passengers) a few weeks later.

    c) £200m wouldn’t have achieved an orderly run-down, because as soon as that happened all the creditors for the whole £3bn would have been after their money, and it would be back in the same position of aeroplanes being seized to cover debts, landing fees demanded in cash, etc., so it would have needed much more cash to keep it going on a wind-down basis.

  7. Just yesterday Richard Murphy was hectoring the internet about others’ ignorance in matters of accounting, and today he demonstrates that he doesn’t know that a subsidiary company is a legal entity in and of itself. He also demonstrates that he doesn’t understand the implications of that fact.

  8. It took about ten seconds for the Brexit /Nazi / Buffoon Party previously known as the Conservative Part to get into supporting this and that industry for some reason or other( and of course that would be short term political reason) .
    Yay free of EU rules on competition all sorts of opportunities for protectionism arise how fucking super. I expect we will need a State Bank next or more likely eroding the independence of the B of E, which , again ,has been the clear desire of the Brexit /Nazi / Buffoon Party who want interest rates down ( gosh now why would that be with all those ‘opportunities’ coming our way)…to go with the increased borrowing
    Might I remind you clever people this is the second lot of increased borrowing
    Well done guys , well done , the most protectionist government in my lifetime the most fiscally incontinent since the mid 60s and most internationally irrelevant as well.

    I take a step back form it sometimes I cannot believe what I am seeing , its as if the shit on the internet telling idiots they children will grow horns is they get the MMA vaccine was official government policy . Bloody experts eh…. my mate told me his nephew turned into a bee !!!

  9. I suspect the £600m rescue cost must have been padded a bit.

    Thomas Cook’s total group costs for 2018 were £9,788m, which is £188m per week. The airline is only about a third of that (two thirds was the travel agency bit, which isn’t an emergency repatriation issue), so £60m ish for a week, and some of that’s the German bit that the German government has paid to keep going.

    So the costs of getting everyone back should, back of an envelope, be less than £60m, keeping it going for a week to bring everyone back, less the bit the Germans have paid for. Yes, there’s going to be extra costs because you’re having to hire short-term capacity. But over ten times the price?

  10. my mate told me his nephew turned into a bee !!!

    Surely you can’t expect us to believe such pifflingly preposterous poppycock?

    You have a mate?

    they children will grow horns is they get the MMA vaccine

    Is that the one that inoculates you against Conor McGregor or are you just freebasing on Harpic now?

  11. The New Remainiac

    Well done guys , well done , the most protectionist government in my lifetime the most fiscally incontinent since the mid 60s and most internationally irrelevant as well.

    I take a step back form it sometimes I cannot believe what I am seeing , its as if the shit on the internet telling idiots they children will grow horns is they get the MMA vaccine was official government policy . Bloody experts eh…. my mate told me his nephew turned into a bee !!!

    Couple of points:

    – If you’re on medication not taking the prescribed dose can have dangerous side-effects

    – Does your institution know you have access to the internet and are posting on blogs like this one?

  12. @Newmania

    I think there’s very little we can teach an 18th century Mercantile block about protectionism.

    So you vote labour then?

  13. I take a step back form it sometimes I cannot believe what I am seeing , its as if the shit on the internet telling idiots they children will grow horns is they get the MMA vaccine was official government policy .

    No one can make a sentence sing like Newmania.

    Bloody experts eh…. my mate told me his nephew turned into a bee !!!

    Are you sure it wasn’t a newt?

    Did he get better?

  14. are you just freebasing on Harpic now?

    Yup; as a result I am clean sparkling white and severely brain damaged , should fit into Brexit Britain well.

  15. WARNING: Swallowing Harpic can drive you clean round the bend.

    (This has been a public service announcement)

  16. ‘Yup; as a result I am clean sparkling white and severely brain damaged

    I think we have all been able to tell that since you first appeared in the blog – well maybe not the ‘clean sparkling white’ quality…

  17. This forum would work much better if you could reply to other individual replies – so you build up a thread from person to person. Plus if you could give up-ticks and then sort them by upticks – which helps you get a sense of what the popular view is. This advice is free. You’re welcome.

  18. OT – Today, Dominic Raab has been flapping his lips about the USA “abandoning” everyone’s favourite Communist terrorists, the Kurds. Apparently it’s just not cricket for Uncle Sam to try to extricate its dick from the Middle Eastern wasp’s nest.

    And he wants to let the spawn of ISIS into Britain.

    Oh dear. Where do we get these people from and who has the receipt?

  19. @NN October 15, 2019 at 1:20 pm

    I tend to agree. However, Gov’t saw the books, we haven’t

    .
    @Grist October 15, 2019 at 1:32 pm

    SNP may have found a way round EU state aud rules: they buy a stake in businesses – mostly bankrupt shipyards building things for SNP Gov’t

    Imho dodgy and breaks rules

    .
    @james Morgan

    Good God, NO —- K.I.S.S

  20. Yup; as a result I am clean sparkling white and severely brain damaged , should fit into Brexit Britain well.

    Actually, you are now fully qualified to advise Corbyn and Labour on policy.

  21. “And he wants to let the spawn of ISIS into Britain.”

    Raab knows a general election is coming. He imagines showing sympathy for terrorist woglets will garner votes from the woolly-minded women who are apparently deserting the Tories.

  22. @ BniC
    That depends whether the Remainer is a Guardianista, or a Scottish Racist, or someone who knows that his/her/their little subsidy-eater wouldn’t get a subsidy from a half-way sane UK government, or someone who believes that we could create a better Europe (or more realistically that we could stop it becoming as bad as it would be without us) by staying in.
    Category 1 has Brexiters and Tories (i.e. 70+% of the population) queuing up at the gate of the seventh circle of Hell. Category 4 admits that he/she/they doesn’t know, but any of those with a tiny knowledge of the Balkans will say that Bulgarians have been subject to racist abuse for centuries so we should not be surprised (shocked, maybe, but not surprised) that they themselves are racist.

  23. @john77 October 15, 2019 at 9:57 pm

    I don’t pay attention to Fitba news. However, seems the animosity started before game: England supporters shouting over Bulgarian National Anthem was one

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