Thomas Cook: What's gone wrong at the holiday firm?

Swimmers on a beach in Spain Image copyright Getty Images

Travel firm Thomas Cook has come a long way since its formation in rural Leicestershire during the early Victorian era.

Founded in Market Harborough in 1841 by businessman Thomas Cook, the fledgling company organised railway outings for members of the local temperance movement.

Some 178 years later, it is a huge global travel group, with annual sales of £9bn, 19 million customers a year and 22,000 staff operating in 16 countries.

Thomas Cook has had a chequered history, including being nationalised in 1948 - when it became part of the state-owned British Railways - and owning the raucous Club 18-30 youth brand, which it recently closed after failing to find a buyer.

However, just as the travel world has progressed from temperance day trips, so the modern business and leisure market is also changing, and at a far faster pace than in previous decades.

The firm is being buffeted by a number of factors: financial, social and even meteorological, with last summer's heatwave affecting bookings.

As well as weather issues, and stiff competition from online travel agents and low-cost airlines, there are other disruptive factors, including political unrest around the world.

In addition, many holiday-makers are putting together their own holidays and not using travel agents.

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Image caption Thomas Cook's airline has 94 planes

Last summer, shares in Thomas Cook were trading at just below 150p. Now, after a series of profit warnings, the price is just a fraction of that. Earlier this year, analysts at Citigroup bank described the travel firm's shares as "worthless".

In May, Thomas Cook reported a £1.5bn loss for the first half of its financial year, with £1.1bn of the loss caused by the decision to write down the value of My Travel, the business it merged with in 2007.

However, it warned of "further headwinds" for the rest of the year and said there was "now little doubt" that Brexit had caused customers to delay their summer holiday plans.

The company then put its airline up for sale in an attempt to raise badly-needed funds.

However, Thomas Cook has now announced it is in advanced talks with its banks and largest shareholder - China's Fosun - over a £750m cash injection.

The company says it is still facing "intense competition" amid an "uncertain customer environment".

Despite all its problems, Thomas Cook has continually sought to reassure customers, saying it is "business as usual".

The company's boss, Peter Fankhauser, has told the BBC that customers' holiday bookings are "secure" and they can "book with us without worries".

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Image caption 2018's summer heatwave in the UK was blamed for falling bookings

Thomas Cook also says the package holiday is still a popular option for many customers.

Mr Fankhauser told the BBC that "the package holiday is still a very very attractive form of travelling because it gives you the security [and] it gives you the service".

The package holiday share of the market has remained broadly unchanged.

One reason for this is that most air package holidays sold by travel companies based in the UK have ATOL protection.

This protection means that if the business collapses while travellers are away on holiday, they will be able to finish their trip and then travel home.

If a business folds before someone's trip, the scheme will provide a refund or replacement holiday.

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