Thomas Cook: What is happening with the holiday company, and what are your rights if you have booked?

The honest answer is: I expect so.

I realise this looks unhelpful. But it reflects the truth that there is no absolute guarantee that any holiday will go ahead as booked.

In normal times external events such as drones at airports, atrocious weather and volcanic ash can scupper holiday plans. But very occasionally travel companies go bust. When they close down, forward bookings are cancelled.

There have been increasing fears that Thomas Cook’s financial position is precarious. But the fundamentals of the business look sound to me. Thomas Cook is a giant company with an illustrious history, an outstanding brand and, probably, a successful future. It has over 20 million customers each year, revenue of nearly £10bn and 20,000 staff.

Thomas Cook’s share price collapsed on Thursday and Friday 16/17 May because of the company’s poor financial performance.

Someone with 200 shares in May 2018 would have enough for a week’s holiday for two on the Greek island of Zante including flights from Gatwick, transfers and accommodation. Today, their shareholding would barely be worth enough for one single ticket on the Gatwick Express.

Thomas Cook has arranged a financial backstop of £300m in case it is needed, and is actively selling its airline – which, with over 100 aircraft, is a sound and profitable part of the business. The aim is for the sale to help Thomas Cook pay down its huge debts and turn the company around.

Alternatively, someone could take advantage of the low share price and buy the firm. The Chinese group Fosun is rumoured to be interested in Thomas Cook.

Thomas Cook says: “We have taken a number of proactive steps in recent months to strengthen our financial position. We have the support of our lending banks and major shareholders, and just this week we agreed additional funding for our coming 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.”

But there is a risk that fears about its possible failure could become a self-fulfilling prophecy.

All travel bookings are built on faith. You hand over cash well in advance in the expectation that you will take delivery, ie enjoy the holiday, as planned. If many people stop booking because they believe the company could fail, then the fall in revenue could precipitate its failure.

Conversely, so long as enough travellers believe Thomas Cook will stay in business, then it can continue its financial recovery.

This information is provided in the hypothetical event that the company stops trading. Thomas Cook operations are continuing as normal.

Were the worst to happen and Thomas Cook closes, the vast majority of travellers will be able to reclaim their cash. I believe most current customers paid for some or all of the trip by credit card. In this situation, the card issuer will be expected to provide a full refund, whether for a package holiday (flights and accommodation bought in the same transaction) or any other purchase.

People who paid for a package holiday with a debit card should make a claim under the Atol scheme, which is administered by the Civil Aviation Authority (CAA).

For other trips, such as flight-only purchases, paid for by debit card, the the first place to seek a remedy is the card issuer. Although there is no legal requirement for debit card issuers to pay out if the supplier collapses, the voluntary “chargeback” scheme should help you out.

That is always the problem when airlines and holiday firms fail – you get your money back, but the actual replacement cost for a similar trip is much higher – not least because other firms can put their prices up to exploit the surge in demand.

A good travel insurance will pay the extra to provide a “like for like” trip.

Package holidays will continue as normal, with hotel bills paid and new flights provided by the CAA. For flight-only passengers, rescue fares should be provided by other airlines. You can then claim back the cost of the original flight from the credit-card provider or travel insurance.

There is every likelihood that the trip will go ahead as planned. If there is any issue – eg money you paid the travel agent not having been passed on – then Abta, the travel association, will be able to advise.

Thomas Cook Airlines is a successful part of the business and is currently up for sale. If it is sold, you can expect all present obligations to be carried out as planned. Were it to close down with the rest of the business, Tui would find someone else to do the flying.

Yes. The cards are issued by Wirecard Card Solutions Ltd and operated separately from Thomas Cook. Wirecard is regulated by the Financial Conduct Authority.

Yes. On 22 November 2011, Thomas Cook’s share price collapsed even more spectacularly, losing around three-quarters of the company’s value on some bad financial news. The firm sold off some family silver, cut costs and improved operations. I expect the same will happen now.

Once again, people working for the travel company are facing uncertainty – and, if they work in Thomas Cook’s retail travel agencies, having to respond to questions from understandably concerned customers.

Assuming the firm remains as a going concern, there are certain to be cutbacks – in particular among High Street travel agents. Any part of the business that is not making a demonstrably positive contribution is likely to come under intense scrutiny.

Should the worst happen and Thomas Cook closes down, then more than 20,000 staff will be in the awful position of looking for new jobs. Retail agency staff are likely to be in a tougher position than those working for the company’s overseas and airline operations.

Yes, because the first question asked of anyone seeking to claim from Atol will be: “Did you use a credit card?”

Anyone with a credit card will rationally use it to pay for a holiday, to defer payment and benefit from the consumer protection provided under the Consumer Credit Act. So most claims will be met by the financial services industry.

The Air Travel Trust fund, which comprises the Atol contribution of £2.50 a head for everyone taking a package holiday, has a surplus of upwards of £150m. This is more than enough to cover the costs of assisting travellers abroad and future customers lacking in other protection.