XL collapse: Thousands of holidaymakers stranded after tour operator goes bust
Published 12/09/2008 | 08:33
Thousands of holidaymakers are stranded abroad this morning following the collapse of XL holidays. Flights from Belfast and Dublin are also in doubt as the after the company went into administration.
The airline had three flights scheduled to leave from Belfast International Airport to Greece next week.
XL Leisure Group announced it was grounding all flights early today after going into administration having failed to secure a rescue package.
The group, which had still been taking bookings until recently, said it had been hit by rising fuel costs and the credit crunch.
The Civil Aviation Authority and other travel companies launched a major operation to help holidaymakers stranded by the collapse.
Administrators Kroll said customers who booked packages with the group's tour operators were protected by the CAA's ATOL scheme.
But people who booked flights with XL Airways were not covered.
Kroll said: "Customers who bought a flight from XL Airways are not protected, however we understand that the CAA will endeavour to offer these customers flights, but there will be a fee to cover the cost."
Scores of disappointed XL customers queued at the firm's main airport Gatwick this morning, one of the busiest days of the week for holiday flights.
Many had no idea what had happened until they were told by airport officials.
Julian Castle said he and his wife, Marion, had booked flights to Florida with XL to go on a two-week holiday with friends to celebrate his 60th birthday.
The couple, originally from Harwich, Essex, arrived at the West Sussex airport earlier this morning after flying in from their home in Murcia, Spain.
Mr Castle, 60, said: "We've been queuing up for about two hours and have been told we can get other flights but we'll have to pay £695 each."
Mildred and Steve Simpson, from Islington, north London, were also meant to be flying to Florida, along with their 14-year-old daughter, Mary.
Mrs Simpson, 46, said: "We booked everything through XL Leisure Group; our flights, hotel, even our tickets to Disney World. We're absolutely gutted."
Transport Secretary Ruth Kelly said everything possible was being done to get stranded holidaymakers home.
She said "The industry has reacted well to this collapse of a major tour company and are assisting the CAA with the recovery plans to ensure that affected passengers are repatriated as soon as possible."
In a statement on its website, the group said it had been hit by volatile fuel prices and the credit crunch.
XL Airways used to operate flights to more than 50 destinations across Europe, America and Africa.
Passengers yet to travel should make alternative arrangements, while those already on holiday will be brought home on flights arranged by the CAA, the statement said.
Customers who booked through four tour operators - The Really Great Holiday Company, Kosmar Holidays, Freedom Flights, and Aspire Holidays - are protected under the Air Travel Organisers' Licensing (ATOL) scheme, it said.
However, those who booked direct with an XL Group company were urged to contact ATOL immediately.
The XL statement said: "The companies entered into administration having suffered as a result of volatile fuel prices, the economic downturn, and were unable to obtain further funding.
"The joint administrators cannot continue trading the business and therefore all flights operated by the companies have been immediately cancelled and the aircraft grounded.
"Going forward, the joint administrators are unlikely to be able to trade the business or operate the aircraft."
XL's demise is the latest blow to the British travel industry and follows the collapse of budget airline Zoom last month.
Thousands of transatlantic passengers were left stranded after flights to and from Canada and the US were grounded as it called in the administrators.
Zoom blamed its financial woes on a jump in fuel bills as a result of the high cost of oil.
On Wednesday another tour operator Seguro Travel Limited went into administration.
The company offered package deals to Gran Canaria and Costa Brava from Glasgow Prestwick Airport.
The CAA said it was working with the travel industry to bring tens of thousands of stranded XL holidaymakers home.
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 the XL tour operators, it said.
A spokesman said: "The CAA will make arrangements for those customers currently abroad who booked their holiday or flight with an ATOL tour operator to complete their holidays and fly home.
"All future departures with the XLUK tour operators and XL Airlines have been cancelled. Customers due to travel from the UK are advised not to go to their departure airport. Tour operator customers will be able to claim a full refund from ATOL."
ATOL spokesman David Clover described the group's collapse as "a huge failure" and urged disgruntled holidaymakers to be patient.
Mr Clover said: "With XL Airways no longer operating we are having to bring in substitute aircraft to bring people home.
"We ask people to be patient while we organise that... bear with us, this is a huge failure."
Mr Clover defended the decision to allow the company to continue trading until it went bust.
He said firms should be given every opportunity to find a "white knight" investor to save them.
"It's right that a company is given every opportunity to continue to trade," he told GMTV.
"Clearly we got to a point where the game was up and the company wasn't able to operate and had to close."
Peter Long, chief executive of Thomson and First Choice owner TUI Travel, said the two firms were "doing everything they can" to help XL customers stranded abroad.
Mr Long said: "In the current environment, where the price of oil has increased substantially, we are continuously seeing airlines with less than robust business models failing.
"Unfortunately, many people believe that they will be protected when this arises and this is not the case.
"Scheduled airlines, low cost airlines and online intermediaries, unlike tour operators, are not bonded, which leaves their customers stranded or unable to get their money back in the event of failure."
Jim McAuslan, general secretary of the British Airline Pilots' Association (Balpa) said: "This is a terrible and brutal experience for passengers and staff alike. Passengers have lost their holidays, our pilots have lost their jobs.
"Over the past months we have worked to keep XL going, including forgoing pay rises, so the announcement is a major blow.
"We are meeting with the administrators this morning to review the situation.
"In conjunction with our lawyers we shall be meeting with our members over the next few days to discuss their options.
"Today's collapse does not signal the end of foreign holidays and there is still buoyant demand."
XL's main lender Straumur said it "deeply regretted" the firm's fall into administration despite "considerable financial restructuring efforts over a sustained period".
The investment bank said its current exposure to XL was 45 million euros (£35.8 million), but it is uncertain how much will be recovered.
Icelandic bank Straumur has 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.
The XL Leisure Group, which is based in near Gatwick, in Crawley, West Sussex, employs around 1,700 people worldwide, according to administrators Kroll.
The corporate recovery and financial restructuring firm said the XL group had collapsed as a result of "funding and cash flow issues".
It added an emergency helpline - 44 289 185 6547 - had been set up for "distressed customers".
Holidaymakers abroad were advised to dial +44 208 242 4783, while those in the UK should call 0800 068 8991.
Kroll said the following XL group companies had gone into administration - XL Airways UK, Excel Aviation Limited, Explorer House Limited, Aspire Holidays Limited, Freedom Flights Limited, Freedom Flights (Aviation) Limited, The Really Great Holiday Company plc, Medlife Hotels Limited, Travel City Flights Limited, Kosmar Villa Holidays Public Limited Company.