Thomas Cook’s money problems – should holidaymakers be concerned?
Back in May 2019, Thomas Cook announced half-year losses of £1.5 billion and saw its share price fall 40 percent as a result. In July 2019, it was announced that Thomas Cook were undergoing rescue talks with investors and banks, which could see the Chinese investor FoSun, buying a £750m share. This move will see Thomas Cook's biggest shareholder owning the majority of the business, but Thomas Cook has insisted it will be 'staying under the ownership of Thomas Cook Group plc', and confirmed that the tour operator and airline will continue to work alongside one another.
As a result of the rescue talks, Thomas Cook shares dropped to just 7.11p compared to 104.2p in July last year.
Thomas Cook tweeted reassurance to its customers:
So is Thomas Cook about to go bust?
Thomas Cook has said that suggestions that the 178 year old business is about to go bust are irresponsible. The new proposed deal, which is yet to be finalised, will replace the previously suggested £300 million financing deal that was agreed with Thomas Cook's lenders in order to boost its current financial position.
Thomas Cook said in a recent statement: “We have taken a number of proactive steps in recent months to strengthen our financial position.
We have ample resources to operate our business and at the same time, as usual, our liquidity position continues to strengthen into the summer period. As an ATOL-protected business, all of our holidays are protected under the package travel directive, so our customers can have complete confidence in booking their holiday with us.”
Thomas Cook is doing all they can to reassure customers and have secured additional funding to cover any cashflow shortfall in the coming months. Now is an incredibly busy time for travel firms and so the recent uncertainty is likely to have an impact on sales.
Should Thomas Cook customers be worried?
On its website, Thomas Cook has assured customers to not worry about their summer holiday plans and has said it's 'looking forward to taking the 11 million customers who have booked with us on holiday this summer.'
It's also taken to social media to reassure customers that have expressed worry about their summer holiday bookings.
One worried customer contacted them asking "I have a holiday to Florida booked for April 2020, will this be affected by the problems"?
A spokesman called Jamie responded by saying "Hi, please try not to worry, the recent media speculation has no impact on our operations, it's business as usual and you'll still be going away. To give you extra peace of mind, if you have a package holiday, it is fully ATOL protected, so your money and holiday are safe".
Thomas Cook say: 'As an ATOL-protected business, all of our holidays are protected under the package travel directive, so our customers can have complete confidence in booking their holiday with us'
What happens to my holiday if Thomas Cook goes bust?
Thomas Cook has said 'No - Thomas Cook is here to stay. Today we have announced plans for Thomas Cook’s future. It will have no impact on our customers who can continue to book holidays and flights with confidence.'
All flight-inclusive holidays offered by Thomas Cook are financially protected by the ATOL scheme. ATOL stands for Air Travel Organiser's Licence and the protection is designed to reassure consumers that their money is safe and should provide assistance in the event of a travel company going bust. When you pay for your holiday you should be supplied with an ATOL Certificate. You should check your certificate to ensure that everything you booked (flights, cruises, hotels and other services) is listed on it.
Not all flights sold by Thomas Cook are protected by the ATOL scheme. It is likely that if you have booked a flight only and have not received an ATOL certificate then your flight booking will not be ATOL protected.
Getting your money back is one thing but what if you still want to go on holiday, will you be offered a replacement holiday package?
Thomas Cook is one of the largest operators and so it is impossible to say what will happen to existing bookings should they go bust. ATOL protection should ensure that you do not suffer financially but you would need to contact the company directly to find out how it may affect you.
What happens if Thomas Cook goes bust while I'm on holiday?
If you are on holiday when a travel company goes bust you should be protected if the holiday you booked is a package holiday. According to Which? the Package Travel and Linked Travel Arrangements Regulations require organisers of package holidays to provide protection for your money and to bring you home if necessary.
Make sure that you keep all of your documentation safe, including your booking information, ATOL certificate and any relevant information such as travel insurance documents.
What about people who have booked flights only - are they covered by ATOL?
No, as explained above, it is unlikely that flights will be ATOL protected unless they were bought in Thomas Cook's own stores (although if you paid by credit card you may be protected under the Consumer Credit Act - see below). Travellers should make sure they get suitable travel insurance cover ASAP.
See our guide on 'How to save money on your travel insurance'.
What this unfortunate episode does highlight is the importance of booking travel insurance as soon as you book any flights or travel arrangements in order to ensure you get your money back in the event of your travel operator going bust.
What if you paid by credit card or debit card?
If you pay on credit cards (over £100 per person) then you should be covered under Section 75 of the Consumer Credit Act. Read our article 'When it's best to pay by credit card'
Similarly with Visa or Mastercard debit card payments. The card issuers operate a voluntary (not legally binding) chargeback scheme, where they get your cash back from the retailer's bank if something goes wrong, regardless of the amount spent (minimum £10 on Mastercard).
What is the best way to take money abroad?
If all this talk about Thomas Cook going bust is making you nervous about your upcoming holiday, then you may want to read our article on the 'Best way to take money on holiday'.
We outline the best and cheapest way to withdraw cash abroad, as well as the best and cheapest way to pay by card without being charged.
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