Consumers are being urged to ensure they have adequate financial protection in place to following yesterday’s revelation of Thomas Cook’s financial problems.
The calls came as newspapers picked over yesterday’s unexpected announcement by Europe’s second largest travel group that it was talking to banks about borrowing more money after a deterioration in trading.
Thomas Cook’s share price ended the day 75% down at 10.20p valuing the company at just £89 million, down from a peak of £3.2 billion in 2007, although post close trading saw it recover to 20p.
Interim chief executive Sam Weihagen gave reassurances that the firm has a strong future and that holiday bookings were fully protected.
But Nick Batram, an analyst at City broker Peel Hunt, was reported in The Times as saying customers may now be reluctant to book future holidays with Cook.
“We’ve seen numerous holiday companies fail over the last few years. If one of the quality players is seen as being in financial trouble, it will make customers think twice about booking,” he said.
Peel Hunt issued a guidance document on the Thomas Cook situation which stated that it believed the refinancing would be successful and the company would pull through, although it questioned whether its current equity was worth anything given the firm needs an injection of cash estimated at around £800m.
Anyone booking a package holiday with Cook is protected under the Atol scheme but those with flight-only bookings will not be covered and are being advised to take out suitable travel insurance.
Travelsupermarket.com travel expert Bob Atkinson said: “They need to make sure that the holiday they book is fully Atol bonded and also that they take out travel insurance with cover for supplier failure. It also makes sense to pay by credit card or with a Visa debit card for transactions over £100. Then they’ve got belt-and-braces cover.”
The industry will be watching the performance of Cook’s share price once the London Stock Exchange opens this morning to see any signs of recovery as the company seeks to agree £100 million of additional credit.