Todays Sun newspaper (quality read - and utterly surprised to learn it has a 'business' page !) has an 'intersesting' article regarding the financial fate of Redletter Days ("SunCity", The Sun Newspaper 29 July 2005)
As an operator in the UK offering trial lessons to customers of Redletter days we have become increasingly concerned regarding their financial position.
It would appear that we are not alone in our concerns and I would urge all operators who currently redeem Redletter Day vouchers to assess their outstanding bills and make a decision whether to continue to fly their customers until monies are forthcoming.
Promises have been made regarding money 'bonded' (quoted as £.3.3m) by the bank which is due to be released in the next few days, however, I am aware of a number of suppliers with outstanding debts yet to be settled by Redletter Days.
It doesn't take the brains of a rocket scientist / helicopter pilot to calculate what may be left in the pot once the (substantial) bills are paid for those suppliers that I am aware of !!
For the legal beagles this is only my personal opinion, not that of my company, family, pet or anyone else that may be held accountable for unsubstantiated comments.
Remember ... it's better to be Pi**ed Off than Pi**ed On !!
Quotation from today's "The Sunday Times":
"The business founded by Rachel Elnaugh, the entrepreneur and television personality, is on the brink of administration this weekend. Elnaugh has called in restructuring specialists to advise on the future of Red Letter Days, the company she founded 16 years ago"
"....More than 3m pounds of payments are believed to be held in bond by Barclays Bank. However, last night there was some confusion about whether all of the firm's customers would be entitled to refunds if the firm were placed in administration"
Large article in yesterdays Mail on Sunday. This morning BBC breakfast news business section broadcast complaints from customers who had been turned away from activities over the weekend due to non-payment. BBC said they would contact trading standards to get help/advice for customers.
News like this often gives the final shove down the slippery slope.
They invited my company to a meeting with them about 3 years ago to work out a deal where they supply us with people wanting to skydive. They asked us to give them a 33% discount on our normal prices. We laughed, turned and walked out. They were charging their customers 200% more than our normal price at the time.
My advice is cut out the middle man a go to direct to the people supplying the " experience "
According to BBC News, Red Letter Days are now in administration.
Gift firm calls in administrators
Adventure and experience gift firm Red Letter Days (RLD) has been placed in administration, it has been confirmed.
The firm, run by Dragon's Den judge Rachel Elnaugh went into administration on Monday after building up large debts and some suppliers withdrew services.
"We are looking for a quick sale and we have received some interest," administrators Kroll said.
On Sunday, it was confirmed Ms Elnaugh was in talks with fellow Dragon's Den judge Peter Jones about selling RLD.
Ian Haworth, a spokesman for the firm said at the time that Mr Jones "hopes to make an announcement on Tuesday".
However, reports suggest he could face a battle with former Millwall Football Club chairman Theo Paphitis who is also said to be keen on reviving the business.
Administrators said in a statement that the firm had collapsed "as a result of cash flow difficulties that can only be resolved with further investment".
Administrator Andrew Pepper added that a number of third parties had expressed interest in the firm, but declined to identify any prospective buyers.
"We are very keen to sell this business in short order, as any consumer-facing business can quickly lose value if its customers lose confidence in the brand and we will be looking to act very quickly to prevent this from happening," he added.
The firm had been placed in administration as a "protective measure" and its "outstanding brand position" would make it attractive to any buyers, Mr Pepper said.
Chief executive Ms Elnaugh set up the firm 15 years ago after searching high and low for a birthday present for her father.
The group offers "experience gifts" whether it be high-octane motor racing or gentler pursuits such as gardening lessons with Charlie Dimmock.
The firm offers vouchers for more than 1,000 activities that are available at various department stores and online.
According to its website the company is a £20m business leading a market that is now worth £200m a year.
Earlier this year, the company appointed Sir Rodney Walker as chairman in anticipation of listing on the Alternative Investment Market (AIM) later this year.
It is now only a few weeks since Rachel was assuring the media that RLD had £3-4 million in the bank and no liabilities!
Financial broadsheets now reporting massive trading losses during last year or two (12 months upto July 2003: £4.7 million loss.. 11 months to June 05: £770,000. Debts today £12 + million. London Times 2nd August).
Stunned to learn that RLD has no fewer than 150 employees! Holy Moly, how many folks do you need to take 'phone calls and put vouchers into envelopes?
"Buisness as usual" so let me get this straight the company owes thousands to pretty much all the suppliers in the country and "Red Letter Days creditor suppliers, however, are unlikely to see any money from the administrator, the new owners said"
Do they think were mugs or something that we would consider dealing with them knowing that we wont see a bean... dream on, companys like Red Letter Days cant survive without the support of their suppliers. They have nothing but a call centre a fancy website and those stupid tickets that they give you to you wear around your neck.
Quote From the BBC
"The firm, run by Dragons' Den TV show judge Rachel Elnaugh, went into administration on Monday, weighed down by debts.
But another Dragons' Den judge Peter Jones is teaming up with ex-Millwall chairman Theo Paphitis to buy the company's assets.
The deal means more than 150 Red Letter Days employees could keep their jobs.
News of Red Letter Days' difficulties left thousands of customers who held vouchers for Red Letter Days' adventure trips such as hot air ballooning and bungee jumping in limbo.
In a statement posted on Red Letter Days' website, Mr Jones and Mr Paphitis said they were ready to honour all experiences that had been bought directly from the firm through Visa and MasterCard.
Red Letter Days' creditor suppliers, however, are unlikely to see any money from the administrator, the new owners said
They could not guarantee vouchers bought through High Street shops - but said they were putting in place measures to make sure these were honoured too.
"We envisage that very soon it will be business as usual," the new owners said in a joint statement. "
We have been approached by the "new" Redletter Days company looking to strike a deal to passify the hoardes of disgruntled voucher holders .... oops, sorry ... to ensure the continued success of the strong brandname and to generate a 1000% increase in the amount of business put our way (am I starting to sound cynical ?) in the future.
(I make no excuses for the liberal use of "quotes", as this is a habit I have picked up from the "new" owners, and I have to say rather enjoy "it" !!)
Without going into the details of the deal in a public domain, suffice to say the deal involves both the new owners and the suppliers taking a 'hit' on vouchers sold before the demise of the "old" RLD firm.
This is an example of the "generous" nature of the new owners who, we are informed, are not obliged to accept any repsonsibility for vouchers sold prior to their purchase of RLD, so I guess we should count our lucky stars that we've been "invited" to demostrate our "generous" nature also.
I have spoken with one or two other operators to get feel for their interpretation of the deal, to see whether this is something we should get involved with, or whether we should tell them to stick it up their "new" Red-chuff, as without suppliers there is NO business !
We feel that
By agreeing to the deal we are: Protecting our relationship with the "new" company; generating some revenue albeit that some experiences will be at cost; and helping to increase the vast personal wealth of the "new" owners and to resurrect the horse carcass that was RLD
By NOT agreeing to the deal: We don't increase our exposure to the new company, but maybe jeopardising our relationship with them in future.
I would be very grateful to hear from other suppliers either here or via private message to ascertain what the general industry consensus is, with sepcific reference to:
i) would you go ahead with the deal or not ? ii) do we club together to say NO to the deal and force their hand ? iii) do we club together and get a single legal representative (any ideas FlyingLawyer ?) to chase the bad debt from the administrator ? iv) do we agree to the deal but insist on better terms ? v) do we roll over like puppy dogs and agree to everything because we're worried about losing the business ?
Naturally this is a sensitive topic, so any contact will be in strictest confidence but I think this is a prime opportunity for the industry to stick together and PPRuNe being the ideal forum for this discussion.
I can't believe anybody actually books through them without a five minute google search to find out what the direct costs will be instead. A friend of mine has their catalogue and out of interest I checked out their aviation packages. Most appeared nearly double the going rate!
My thoughts are that a company offering vouchers for flying experiences with no knowledge of the industry and a good relationship with the operators should not sell vouchers. The members of the public when buying the vouchers should also be able to discuss what thier actual requirements are. Recently the CAA have asked voucher suppliers to discuss with operators the use of trial flight vouchers when the voucher holder as no intention to learn to fly, that then being a commercial flight. Maybe the pressure to voluntry do this could be the demise of companies like RLD. On the other hand, and not with any figures in my head, if the industry loses many of the public who wish to take an helicopter experience flight then that could have a great impact on the industry.