Thomas Cook has moved to reassure customers that they need not worry about their holiday plans as the tour operator wrestles with concerns over its financial position.
Holidaymakers have inundated the operator’s social media pages with queries about their summer trips after the 178-year-old company last week saw its shares plunge amid news of a £300million emergency loan. One city analyst said its stock was “worthless”.
But staff were resolute. “We’ve been taking customers on their holidays with us for over 175 years and we plan to do so for a very long time to come,” one Thomas Cook employee told a customer in response to a question about her Mexican wedding booked for September.
“There might be a lot of chatter about us in the news at the moment but it’s all based on speculation.
“It’s business as normal for us as we continue to take customers on their flights and holidays with us and that’s not going to change at all.”
Another post by Thomas Cook read: “We are not going bust, we are not going into administration and you will not lose your holiday.”
Thomas Cook said in a statement it had taken a number of steps in recent months to strengthen its financial position, adding that it had “ample resources to operate our business”.
What has happened to Thomas Cook?
The world’s first tour operator, and the UK’s third largest, has had a torrid 12 months.
Last summer it took a hit from the UK’s lengthy heatwave, as well as England’s success in the World Cup, with British holidaymakers opting to stay put and watch football instead of escaping to the Med.
Chief executive Peter Fankhauser said last July that the heatwave across Europe “was delaying the decisions of customers to book”, and that though destinations such as Turkey and Tunisia were experiencing a recovery, it was not yet enough to bolster the books.
Thomas Cook then later in the year issued a number of profit warnings which in turn saw its shares slump. Last week Thomas Cook announced half-year losses of £1.5billion, which baffled analysts in the City and saw it shares fall again.
“There is no doubt that we are operating in a challenging environment,” said chief executive Peter Fankhauser. “There are high levels of discounting.”
He went on to say there was “little doubt” that the Brexit process had led to many customers delaying their holiday plans. The problems continued despite the deadline for Brexit being pushed back until later this year.
He added: “We have seen no material change to booking patterns in recent weeks. It is a cloud that is still above the consumer.”
While the tour operator manages the short-term crisis of its margins and debt, it also has a longer term fight on its hands as it seeks to compete with more agile web-based travel agents. Last year, the market value of website On the Beach surpassed that of Thomas Cook, reflecting a shift in the way the British public book holidays.
Should I be worried about my holiday?
Not necessarily, Thomas Cook has said it has the support of lending banks and its shareholders and has used its emergency loan to sure up its “winter cash low period”.
“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,” it said.
Additionally, all holidays booked through Thomas Cook will be Atol protected, which means that your money is guaranteed by the Government, via the Civil Aviation Authority (CAA).
The scheme means that should a tour operator collapse before your trip, either a refund or replacement holiday will be provided.
Thomas Cook said: “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.”
Insiders have said fears of a potential collapse have been overplayed – not least because its cash balances swell in the first half of the calendar year as customers pay deposits for summer holidays.
What would happen if I were stranded abroad?
If you are abroad on a protected package holiday and your tour operator fails, then the CAA will cover whatever arrangements are necessary for you to finish your trip and get home.
The Telegraph reported on Sunday that the CAA was understood to be keeping a close eye on matters.
What about Thomas Cook Airlines?
Thomas Cook Airlines is currently up for sale, but until it is sold remains part of the tour operator.
This is where the situation in terms of protection becomes a little more complex. The airline arm of the operator is separate and sells both packages and flight-only trips, some of which are not Atol-protected.
Atol protects bookings when flights and accommodation and/or car hire are purchased from the same operator and, according to the CAA, “some flight-only bookings – usually those where you book flights but do not receive your tickets immediately”.
The Thomas Cook Airlines terms and conditions states that “not all flights offered and sold by us will be financially protected under the Atol scheme”.
The CAA says that customers can check if their purchase is Atol-protected by ensuring they are given an Atol certificate at the time of booking.
The support given to airline customers in the wake of the collapse of Monarch in 2017 was actually contrary to the rule book as many holidaymakers were repatriated despite booking a break that was not Atol-protected.
What can I do to ensure my money is protected?
Nick Trend, Telegraph Travel’s chief consumer editor, said Thomas Cook’s struggles are another reminder to make sure you are protected against potential failures.
“Thomas Cook package holidays and charter flights all come with guaranteed financial protection,” he said. “But currently there is no automatic financial protection or refunds when a scheduled airline fails – as many passengers found to their cost after the collapse of Monarch Airlines in October 2017.
“A Government review has just proposed a new protection system, but in the meantime, it’s important to pay with a credit card (which gives you protection for flights costing over £100) or buy travel insurance which includes cover for scheduled airline failure.”
If you wish to check your policy for airline failure, the section you are looking for will be called either Scheduled Airline Failure, or End Supplier Failure.
If your policy has Scheduled Airline Failure cover, then you will be able to claim back the cost of your flight if you are unable to travel. If you are abroad the policy will pay the cost of a one-way ticket (in the class you originally booked) to get you back home. It will not cover your unused elements of the holiday such as hotel accommodation and car hire.
If you have End Supplier Failure cover then you get both the scheduled airline failure cover and the cost of any other elements of the trip (hotel, car hire etc) which you have had to cancel because of the collapse.