What happens if Thomas Cook goes bust? What do I do if my holiday is affected? Everything you need to know

Rebecca Speare-Cole20 September 2019

Thomas Cook could fall into administration as early as this weekend if it does not find £200 million in extra funding as it attempts to prevent a collapse.

The company said it is in talks with stakeholders, including leading shareholder Chinese firm Fosun, to bridge the funding gap.

It said the fundraiser is expected to significantly dilute existing shareholders' stakes in the firm, with "significant risk of no recovery".

The Daily Mail quoted company insiders as saying the 178-year-old travel firm could go bust as early as Sunday.

Here's everything you need to know about what happens if Thomas Cook goes bust...

A sign hangs in front of a branch of travel agent Thomas Cook in London
REUTERS

What happens to Brits stranded abroad?

If Thomas Cook does collapse, an estimated 180,000 people could be stranded abroad.

The firm also employs 22,000 staff around the world, including 9,000 in the UK.

Were the company to go under, the Civil Aviation Authority is expected to launch a major repatriation operation to fly home UK holidaymakers stranded abroad.

This will involve hiring aircraft at a cost to taxpayers of millions of pounds.

A Thomas Cook Airbus A321-200 airplane takes off at the airport in Palma de Mallorca.
REUTERS

The Daily Mail said government officials have drawn up plans for what would be "Britain's biggest peacetime repatriation".

Known as Operation Matterhorn, it has been put together by the Department for Transport and the Civil Aviation Authority, the paper said.

A Department for Transport spokeswoman said: "We do not speculate on the financial situation of individual businesses."

What happens to holidays booked with Thomas Cook?

Customers who booked a package holiday through Thomas Cook will be financially protected through the Atol scheme.

That means those already abroad will be able to continue with their holiday and an alternative flight home will be organised for them.

A pedestrian walks past a Thomas Cook shop in central London,
REUTERS

Those with future bookings will be offered a full refund.

Anyone who bought a flight-only deal through Thomas Cook is likely to have to contact their credit or debit card provider to try to get their money back.

Why is the company at risk of collapse?

The travel firm has suffered recently as a result of mounting debts, reporting a £1.2 billion net debt in its half-year results in May.

It has also been hit hard by an influx of online competitors which has resulted in oversupply, forcing tour operators to cut prices.

Thomas Cook said the £200 million needed would be a "seasonal standby facility", on top of £900 million it had already raised from Fosun and its lenders.

Troubled travel company Thomas Cook has agreed the key terms to a rescue deal with Chinese firm Fosun.
PA

In the High Court last month, barrister Tom Smith QC, who led Thomas Cook's legal team, told Mr Justice Norris that the Thomas Cook group had a "net debt position" of around £1.25 billion.

He said a planned deal with Chinese tourism group Fosun would involve an injection of £900 million of "new money".

Mr Smith said Thomas Cook had suffered because of a "general economic downturn", declining consumer confidence, increased competition from lower cost rivals, the effects of a heatwave in 2018, "environmental concerns" and the weak performance of sterling.

History of Thomas Cook

Thomas Cook is one of the world's largest travel companies, formed by a cabinet maker of the same name.

Mr Cook organised his first trip in 1841, taking around 500 supporters of the temperance movement on a day trip by train from Leicester to Loughborough.

His first commercial venture was an outing to Liverpool in 1845, before expanding to overseas trips in 1855.

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