MyTravel insists Atol bond fears unfounded
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Your support makes all the difference.MyTravel yesterday insisted it could afford to continue operating after speculation in the industry that the Civil Aviation Authority was considering revoking the licence of the beleaguered tour operator.
The company, formerly called Airtours, said it maintained "regular dialogue" with the CAA, which was "very constructive".
Other tour operators have expressed concern that MyTravel might not be able to meet its financial obligations, which include covering the cost of reptriating customers who have gone on holiday only to find that their tour operator goes bust mid-trip.
The CAA regulates some areas of the airlines industry and requires all holiday companies to put up money to cover such costs, known as an Atol financial bond. MyTravel's rivals have become alarmed because if an operator cannot afford to repatriate or compensate their customers, an industry-wide pool is drawn on.
A spokesperson for MyTravel said there was no need for concern, adding: "We are fully bonded under CAA regulations, with £400m in place."
The Government is also keeping a close eye on the situation. Alistair Darling, the Secretary of State for Transport, is understood to have held a series of meetings with the CAA to discuss MyTravel's finances. The Government could also find itself liable to foot the bill if a company went down because it has pledged public money to support the joint emergency fund.
MyTravel takes more than 15 million people on holiday each year and is hoping to boost its finances considerably from the upcoming summer season.
The group has had a traumatic recent history. In common with the rest of the industry, MyTravel has had to cope with a slump in customers after 11 September, a decline which the war in Iraq has exacerbated.
Last year it also had to restate its 2001 results after an overhaul of its accounting procedures and shocked the City by issuing three profits warnings in five months. It has decided to cut 2,000 jobs from its 23,000 full-time workforce in an effort to save cash. The troubles have led to the resignation of Tim Byrne, its chief executive, who departed in October with a £1.2m pay-off and David Crossland, the company's founder, has also stepped down as MyTravel chairman.
The company has about £600m of liabilities and is also in protracted talks with its bankers with the hope restructuring its debt repayments.
Separately, British Airways, which cancelled flights to Iraq in the build-up to the 1991 Gulf War, said it planned to resume flights to Baghdad after a 13-year gap.The frequency of flights and the timetable would depend upon negotiations with the new Iraqi government, BA said.
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