September 13, 2008

More Airlines on Brink As XL Collapse Strands 65,000

By Jenny Haworth; Lyndsay Moss

A FURTHER 30 airlines could go bust in the next three months, the chief executive of British Airways warned last night, after the collapse of XL Leisure Group.

Willie Walsh said there were many other "weak" airlines worldwide that he expected would suffer the same fate as Britain's third- largest tour operator.

More than 65,000 holidaymakers were left stranded by the collapse of XL Leisure yesterday. Hundreds of people arrived at UK airports to find their flights had been cancelled after the group went into administration, blaming volatile fuel prices and the economic downturn.

Tens of thousands of people on foreign breaks were left wondering how they would get home.

About 200,000 customers with advance bookings with XL have had their flights cancelled.

All XL flights from Glasgow Airport have been cancelled, including those to Alicante and Palma today and Larnaca tomorrow.

Another airline, Freebird, stepped in to take on a flight due to leave at 5pm from Glasgow yesterday evening.

The Civil Aviation Authority was last night struggling to find ways to bring back travellers to the UK.

Meanwhile, XL's 1,700 staff worldwide were facing an uncertain future.

Its chief executive, Phil Wyatt, said he was "devastated" at the company's collapse and apologised to his customers and employees.

Mr Walsh said: "We have seen 30 worldwide go. I would be very surprised if it is not something similar to that in the next three or four months."

He added: "This is a difficult trading environment and some of the airlines that we have become used to will not survive."

Kroll, the firm brought in as administrators for XL, said most people who booked holidays with it should get a refund.

Those who paid by credit card, Visa debit card or as part of a package holiday should get their money back. Those who bought their holidays through a travel agent affiliated to the Air Travel Organisers' Licensing (Atol) scheme should also get refunds. However, anyone else will not.

Stuart Mackellar, a partner at Kroll who has been appointed as joint administrator of XL,

said: "We are not thinking about liquidation at the moment. We are thinking about a rescue plan for the survival of parts of the business."

In the past 12 years, since XL started flying out of Glasgow, it has transported 795,000 passengers, 100,000 in the past year alone.

XL's demise is the latest blow to the British travel industry and follows the collapse of budget airline Zoom last month. Zoom blamed a jump in fuel bills.

On Wednesday another tour operator, Seguro Travel, which operated out of Prestwick Airport, went into administration.

Earlier this week Spanish charter airline Futura International did the same.

However, TUI Travel and Thomas Cook, two holiday giants, experienced strong gains yesterday as a result of the collapse of competitor XL, with shares in both up more than 6 per cent.

XL said in a statement on its website: "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."

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