What you need to know about Thomas Cook’s worsening financial condition
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Thomas Cook Group plc has been in financial difficulty for some time. As previously reported by TPG, the 180-year-old travel group with more than 20,000 staff has seen a continually plunging share price and suffered heavy losses of more than a billion pounds in just six months this year. The group blames Brexit uncertainty and political unrest in some popular holiday destinations for the poor results.
The BBC reports a group of financiers including Lloyds and Royal Bank of Scotland have given Thomas Cook just days to secure £200 million in emergency funding or it may be forced to cease operations, which could result in the largest peacetime repatriation in British history, with 150,000 travellers potentially stranded. As with the recent collapse of Monarch Airlines, a repatriation exercise would be organised and funded by the Civil Aviation Authority if required. This could easily cost hundreds of millions of pounds, given the size of the Thomas Cook Group.
It is important to note that as a travel group, Thomas Cook has several divisions, including package holidays, hotels and its own airline. The airline division is understood to be profitable despite the overall losses sustained by the wider group, and Thomas Cook may sell off the airline in order to raise emergency cash for the rest of the group.
Am I protected?
If you are currently travelling on a Thomas Cook journey (flights, accommodation or holiday package), you should monitor news over the next week, especially next Friday 27 September when the group’s shareholders will vote to approve any rescue deal.
Package holidays are covered by the Air Travel Organiser’s Licence scheme (ATOL), so if you are currently on a Thomas Cook package holiday you will be protected by the scheme should the group cease operations. You will be moved to another hotel and ATOL will organise your return flights, unless the Civil Aviation Authority steps in to do so as it did with the Monarch collapse,
If you have an upcoming trip with Thomas Cook, for right now, it is business as usual. If your trip is a package holiday, ATOL will refund you if the holiday is cancelled.
If you have only flights or accommodation booked with Thomas Cook, these would not be covered by ATOL. It’s a good reminder to check the terms of your travel insurance, noting that some policies exclude insolvency of a travel operator. It is probably too premature to recommend considering changing to another hotel or airline, given Thomas Cook has been in financial difficulty for some time and has continued to operate flights and hotels as normal.
Featured image by Christoph Schmidt/picture alliance via Getty Images
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