Thomas Cook is scrambling to raise £200m in extra funding as it tries to stave off the risk of administration. About 150,000 UK customers are on holidays overseas with the travel company. Here are the answers to some key questions.
So is Thomas Cook about to go bust?
If Thomas Cook does not secure £200m in extra financing it could collapse as early as this weekend. If it finds the funds, it must then seek approval for a financial restructuring at a court hearing on Friday 27 September.
Why is the company on the brink?
Tough competition from online rivals, as well as Brexit, have taken their toll on a business that owes £1.7bn to lenders. The company has also been hit by high fuel prices and hotels pushing up costs, while heatwaves across Europe have prompted some consumers to stay at home rather than fly off to the sun.
What is the company saying?
On the “latest news” section of its website, in answer to the question “Is Thomas Cook going out of business?”, the company stated: “We are working on recapitalisation plans to provide financial stability for the Thomas Cook Group going forward.” It added: “All our package holidays continue to remain fully Atol-protected. All Thomas Cook Group Airlines flights are unaffected and continue to operate as normal.”
What is Atol?
It’s a financial protection scheme (it stands for Air Travel Organiser’s Licence) run by the government-backed Civil Aviation Authority and covers most air package holidays sold by travel businesses based in the UK.
What happens to Thomas Cook holidaymakers due to fly home over the next few weeks?
If Thomas Cook collapsed, about 150,000 UK holidaymakers overseas with the company would, in theory, be stranded abroad.
It is expected the CAA would be ordered by the Department for Transport to launch a major repatriation operation to fly them home, at a cost that could run into hundreds of millions of pounds.Though with so many people abroad, this could take several days, and possibly a week or more.
The CAA states on its website: “If you are on holiday when the Atol holder fails, we will try to ensure you can finish your trip and return.” It advises people to keep checking its website and social media pages for the latest information.
What about customers who have booked holidays over the next few months and next summer?
The CAA says that if an Atol-covered firm collapses, and a customer has not yet started their trip, it would advise them on how to make a claim for a refund. Or, in some cases, the CAA “will appoint a fulfilment partner to provide the holiday”.
Could people be left out of pocket?
If they booked flights only, they are not covered by Atol. Under section 75 of the Consumer Credit Act 1974, you are legally entitled to get your money back if a company goes out of business, provided: a) you used a credit card to book the flight directly with the company; and b) it cost more than £100. But section 75 does not cover goods or services bought through “intermediaries” – for example, websites that sell on flight and hotel bookings. However, these websites may have their own financial protection schemes and/or be covered by Atol themselves. Meanwhile, some consumers may be able to claim on their travel insurance.
I’d like to cancel my existing flight/holiday and rebook with another company. Can I do this?
As at lunchtime on Friday 20 September, Thomas Cook said that if customer chose to cancel their holiday or flight because they were “unsettled” about the news regarding the firm, then the normal booking conditions and cancellation charges would apply.