British holiday firm collapses

September 12, 2008

, LONDON, September 12 – Britain\’s third largest tour operator was on the brink of bankruptcy Friday, stranding up to 85,000 holidaymakers worldwide, as soaring fuel costs and the credit crunch had left it clinging to survival.

The near-collapse of XL Leisure Group added to travel chaos in Britain, where thousands more passengers were unable to take trains to France and Belgium on Friday because the Channel Tunnel remained closed after a fire.

XL Leisure Group, which trades under a host of names, including Travel City Flights, said it had failed to secure a multi-million-pound rescue package.

"The companies entered into administration having suffered as a result of volatile fuel prices, the economic downturn, and were unable to obtain further funding," XL said in a statement.

Kroll, a company specialised in insolvency, was working to see whether the XL had any future.

Britain\’s Civil Aviation Authority (CAA) said XL was probably the biggest holiday operator to collapse in 20 years. The company had operated flights to more than 50 destinations in Europe, the United States and Africa.

The CAA said it would bring back people already on holiday who had been left without return flights.

It estimated there were 50,000 customers abroad who had booked through an XL tour operator, 10,000 on holiday with XL Airways, and 25,000 with other tour operators who shared the XL flights.

A further 200,000 customers had advance bookings with XL\’s tour operators, it said.

Customers queuing at XL\’s main departure point for package holidays, London\’s Gatwick Airport, faced a struggle to snap up tickets for alternative flights to salvage their holidays, although some just gave up and went home.

Many had no idea of its collapse until they were informed by airport officials.

Steve Simpson, 46, from London, was meant to be flying to Florida with his wife and 14-year-old daughter.

He said: "We booked everything through XL Leisure Group — our flights, hotel, even our tickets to Disney World. We\’re absolutely gutted."

XL had been taking holiday bookings until recently.

British Transport Secretary Ruth Kelly said everything possible was being done to get stranded holidaymakers home.

She said in a statement: "I have been holding discussions with my officials about this situation and both they, and the Civil Aviation Authority, have been monitoring developments and putting rescue plans into action."

XL, which carried 2.3 million passengers last year, has 1,700 employees worldwide.

The company\’s main lender, Icelandic bank Straumur, said it "deeply regretted" the firm\’s fall into administration despite "considerable financial restructuring efforts over a sustained period".

Straumur said its current exposure to XL was 45 million euros (64 million dollars), but was uncertain how much would be recovered.

It said it had bought XL\’s German and French subsidiaries, which it considers to be "financially viable and sustainable businesses". They will continue operations as separate commercial entities.

Analysts had warned that more carriers and tour operators would fall victim to the soaring cost of aviation fuel following the collapse last month of budget airline Zoom which operated flights to and from Canada and the United States.

XL\’s demise was also likely to leave English Premier League football club West Ham United needing a new shirt sponsor.

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