Your holiday is safe – we are not facing collapse

THOMAS Cook has been desperately trying to reassure customers that their summer holidays will go ahead amid fears it is close to collapse.

Britain’s biggest independent tour operator has suffered a dire few days that saw its share price fall 40pc after posting a £1.5bn half-year loss.

Pressure mounted on Saturday when an intermediary which processes customer payments said it would hold millions of pounds owed to Thomas Cook for up to several weeks due to concerns over its financial health.

A similar move, which puts pressure on short-term cash flows, had forced airline Flybe to the brink of insolvency.

Yesterday Thomas Cook fought back against what it called ‘irresponsible’ suggestions the 178-year-old business could collapse. It added: ‘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. Our customers can have complete confidence in booking their holiday with us.’

Following Thursday’s halfyear results which revealed the £1.5bn loss – mainly down to a £1.1bn goodwill write- down relating to its 2007 merger with My Travel – major investment bank Citigroup said Thomas Cook’s shares were worthless.

That sent them tumbling 40pc to 11.8p, giving the business an overall valuation of £181m. This time last year shares in the company were 129p – more than ten times the current value.

Holidays that customers have already bought are protected by Air Travel Organiser’s Licence (ATOL) rules, and they will receive a refund if their trip is cancelled.

The scheme is run by the regulator, the Civil Aviation Authority, which was said to be monitoring Thomas Cook closely. It declined to comment last night.

Thomas Cook flights booked with credit cards are protected, but if it went bust other customers would be forced to rely on travel insurance to recoup money.

The firm is now seeking to fight its way out of a vicious cycle where a collapse in confidence leads to money from sales drying up. ‘The summer months are a cash-rich period,’ an insider said yesterday.

The weekend crisis shines a light on the difficulties that Thomas Cook has faced in trying to sell its airline business. Its auditors said that while the sale stalls the company faced ‘material uncertainty’.