Thomas Cook’s shares lost almost half their value on Friday as it announced talks over a possible bailout and takeover.
The company is in “advanced talks” with its largest shareholder, the Chinese firm and Club Med owner Fosun, about a possible bailout and takeover deal.
The news will leave many holidaymakers and others considering booking with the British travel operator (TCG.L) wondering how the news could affect them.
What does the Fosun deal mean for Thomas Cook?
“Thomas Cook was in a position where it needed cash just to get through the coming months, with a plan to sell the airline business not coming off,” according to AJ Bell investment director Russ Mould.
Thomas Cook said the takeover deal and bailout to the tune of £750m gives it enough cash to keep trading throughout this winter at least, as well as “invest in the business for the future.”
The world’s oldest travel company, Thomas Cook has been struggling with falling demand for its package holidays, high debt, Brexit uncertainty, and intense competition.
The move would give Fosun control of its package holiday business. If it goes through, it will be one of the most significant Chinese purchases of a British firm in years.
What does it mean for customers and their holidays?
“Customers may not see a huge difference, at least in the short term,” Mould said of the deal.
Thomas Cook’s chief executive Peter Fankhauser is seeking to reassure customers despite the lack of certainty over its future beyond this winter even if the deal goes ahead.
"They can book with us without worries. We have enough resources to operate our business so they can enjoy their holidays with us," Fankhauser told the BBC.
What happens if Thomas Cook goes bust?
Mould points out that some customers may be worried about the worst-case scenario, particularly if their holidays are booked far in advance.
“Anyone who has booked a holiday with Thomas Cook will want to see the refinancing deal sorted as soon as possible so they aren’t fretting over whether their holiday provider is actually around to fly them to the beach,” he said.
But the law says package holidays have to be protected, and most bookings that include flights enjoy so-called ATOL protection. Some flight-only bookings are also covered.
It ensures customers do receive help getting home and do not lose any money, through compensastion from a government pot funded by travel firms.
Customers should check booking conditions to see if booked or potential holidays are ATOL protected. It means they are guaranteed to either be able to complete their holiday or get a full refund if it is cancelled before they go away.
For bookings without flights, holidaymakers could check if the bookings include ABTA protection. This also guarantees refunds if holidays are cancelled or covers transport costs if an operator goes out of business during the trip.
Alternately, holidaymakers can check if insurance policies include cover for being stranded or trips not going ahead.