Is your Thomas Cook package holiday safe if the travel firm sells up?

HOLIDAYMAKERS booked with Thomas Cook have been panicked by news of a profit warning and possible sale of its airline.

The holiday firm today announced a pre-tax loss of almost £1.5bn in the six months to March.

The UK's oldest travel company is struggling with massive debts and has seen its value plummet from £2.2bn to £180m in one year.

On Thursday, the firm issued a fresh profit warning and reported a half-year loss of almost £1.5bn after a goodwill write-off of £1.1bn, reports 

Analysts at investment bank Citigroup yesterday branded their shares "worthless" and said they should be marked at zero.

Thomas Cook, which served 22 million customers last year, has debts of around £1.25bn.

It also said that there have been several bids for all or bits of its business.

The company has closed 21 of its stores and its currency arm Thomas Cook Money is under review, plus there are more "cost efficiencies" planned.

More of its 566 stores will close when leases end and 150 jobs are being cut from head off.

But if you're a customer who has booked with Thomas Cook, is your holiday safe?

The good news is that holidaymakers will not be left out of pocket if the firm sells, splits or in the extremely unlikely event of closure.

That's because Thomas Cook holidays are ATOL protected.

By law, every UK travel company which sells package holidays and flights is required to hold an ATOL, which stands for Air Travel Organiser’s Licence.

If a travel company with an ATOL ceases trading, the scheme protects customers who had booked holidays with the firm - making sure they don't get stranded abroad or end up out of pocket.

But what would happen if Thomas Cook or part of the business was sold?

Martyn James from Resover said: "When you book a holiday you enter in to a contract - so if another business takes over then your holiday transfers over to the new owners and you shouldn't experience any problems.

"However it pays to know your rights if a mistake or problem occurs.

"If the firm changes something about the holiday significantly (like the dates, hotel, flights) then you should be able to cancel without penalty - though I'd expect them to come up with a suitable alternative."

He adds: "However, always take out a good travel insurance policy - and make sure it begins from the moment you book, so you're covered if you can't travel for any reason."

Going on holiday soon? Read our guide to buying the best and cheapest travel insurance.

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