Many Britons have been wondering what will happen to their holiday if Thomas Cook goes bust. Panic was raised after the firm was faced with the ultimatum that it must provide proof it can operate successfully for the next 12 months or rapidly fill a financial blackhole. Senior members of Thomas Cook staff are now working against the clock to come up with a solution. One of these options includes offloading a massive chunk of their workload. According to The Sun, an unnamed source revealed: “Around 20,000 staff worldwide will lose their jobs and it will have a knock on effect to travel agents worldwide as cruises will also be affected as they may also lose their licence. Several thousand passengers on cruises may also have holidays cut short, stopped part way through holidays and needing assistance in returning.”
Thomas Cook: British holidaymakers may be stranded abroad if airline doesn’t secure £200m (Image: Getty Images)
In August the travel agency turned to Chinese conglomerate Fosun in a bid to draw in some extra cash to help them make it through the beginning of winter. The deal would see the Chinese investment firm handing over a £900m refinancing package which could save the fate of Thomas Cook.
The Civil Aviation Authority has avoided answering question about the firm’s license to operate.
However, should it be denied thousands of British tourists will be stuck in their holiday destinations with no way of getting home. Though it isn’t known exactly how many holidaymakers will be affected, the figure is estimated between 140,000 and 180,000 people.
The CAAA will then be responsible for rescuing and compensating the unlucky travellers. If the company does go under, speculations suggest it could take up to two weeks to bring all Thomas Cook customers home.
The source went on to say: “The CAA has put measures in place including staff and replacement aircraft to assist with repatriation and customer service for the 14 day period following the grounding of all Thomas Cook aircraft.
“Replacement aircraft will depart from various airports, some from the Middle East that are currently not being used due to their routes current being suspended in and out of certain countries.”
Companies don’t go bust because they have too much debt – they go bust because they run out of cas
Currently employing 22,000 members of staff with 9,000 of those in the UK, the financial panic could have devastating effects for a chunk of Britain’s workforce causing after shocks that extend far beyond holidaymakers.
After a reported loss of £1.5bn for the first half of the year some blame has been placed on Britain’s summer heatwave and Brexit as reasons why less people booked holidays. The 179-year-old travel agency points the finger at the growth of online travel agencies and low-cost airlines.
Thomas Cook news: 140,000 British holidaymakers could be left stranded as airline goes bust (Image: Getty images)
Thomas Cook News: The travel agent faces a financial black hole it must fill in 48 hours (Image: Getty Images)
Speaking to the BBC Mark Burgess, chief investment officer of Columbia Threadneedle Investments, described the travel firm as “in a precarious financial position” ands suggested they were “being very careful” about extending lines of credit.
“Companies don’t go bust because they have too much debt – they go bust because they run out of cash,” he continued.
“Banks are managing their exposure very carefully, because the last thing they want to do is to have to write off loans to the company.”
The company is pushing ahead with desperate negotiations between it’s two main banks, Royal Bank of Scotland and Lloyds Bank.
If the Fosun deal is successful the firm is expected to contribute £450m, buying 75 per cent of the company’s tour operator business and 25 per cent of its embattled airline business.
However, it is thought that the company could fall into adminstration by the weekend if they are unsuccesful.
SSA General Secretary, Manuel Cortes, has urged that Thomas Cook “must be rescued”, calling on the Government to intervene if necessary.
Manuel Cortes said: “Our members are going through a time of great stress and worry over their futures. We will, of course, do all we can to help – but what’s needed now is clarity about the future of the Company.
“Thomas Cook must be rescued no matter what. This is not just about the threat of losing jobs and an iconic brand from our high streets but the fact that if Thomas Cook goes under, we will be left with just one major travel operator – TUI – controlling the mass market.
“That would be in no-one’s interests – a lack of competition will always lead to a hike in prices. If need be the Government must step in to ensure Thomas Cook’s survival.”
Now, worried customers have taken to social media to find out what the fate of their sunshine vacations.
One Twitter user reached out to the customer’s help desk tweeting: “@ThomasCookCares can you advise on my flight from mco to orlando 15th october due to recent social media reports about collapse of company?very worried.”
The firm sidestepped the question, describing the news as “media speculation”, doing little to still the rising fear of consumers.
However, speaking with the Express.co.uk, a Thomas Cook representative said: “Thomas Cook Group plc notes the recent media speculation regarding its proposed recapitalisation. Discussions to agree final terms on the recapitalisation and reorganisation of the Company are continuing between the Company and a range of stakeholders
“These discussions include a recent request for a seasonal standby facility of £200 million, on top of the previously announced £900 million injection of new capital.
“The recapitalisation is expected to result in existing shareholders’ interests being significantly diluted, with significant risk of no recovery.
“The Company will provide further updates in due course.”
Thomas Cook cares: The firm described the news as “media speculation” (Image: Thomas Cook Cares Twitter)
With turbulence ahead for Thomas Cook what does this mean for British travellers who have already booked up for an Autumn holiday?
Neil Wright, Managing Director of travel insurance firm CoverForYou sheds some light on the situation. Speaking to the Express.co.uk he said: “Thomas Cook is an ATOL bonded tour operator. This means if it goes bust, the bond will pay back all clients who have paid for holidays but not yet travelled.
“Those who are abroad on these ATOL protected holidays will be brought back by the Department of Transport at no cost.
ATOL doesn’t, however, cover anything booked in addition to the holiday package such as airport parking, excursions etc.
“This is where it is vital to have travel insurance. Policyholders are wise to add Travel Disruption to their cover (purchased for as little as £1.50 with CoverForYou for an individual weekend break) to protect themselves from situations like this.”
For those flying to destinations within the European Union, there are regulations that can offer protection if your flight is cancelled. According to Regulation 261/2004 passengers may be able to claim back any costs that come as the result of the delayed flight, such as accommodation costs or food and drink while waiting at an airport.
Money Saving Expert Martin Lewis explains: “The amount you get is fixed solely on the flight length and delay time.
“So a 1,000km flight delayed by three hours is €250 (£230ish) per person, while a 4,000km flight delayed for five hours is €600 (£540ish) per person.
“If your flight is cancelled, you’re entitled to the choice of a refund or a replacement flight – and that applies whether it’s the airline’s fault or not.
“Be aware that airlines sometimes offer vouchers, but you don’t have to accept these – you can formally say you want cash instead.”
Have you booked a Thomas Cook holiday or are you currently on holiday with Thomas Cook? Email michael.knowles2@reach.com or ring 0208 612 7074.
