MyTravel battles for survival
=============================
we could do without reports like this, particulally in such uncertain times !!
http://www.guardian.co.uk/business/s...925085,00.html
============================================================
CAA steps up surveillance of troubled tour operator's finances
Andrew Clark, transport correspondent
Saturday March 29, 2003
The Guardian
Troubled tour operator MyTravel is facing a fresh battle for survival, with growing concern from regulators about its ability to fulfil financial fitness requirements to fly passengers to far-flung destinations.
The civil aviation authority has stepped up surveillance of the company to ensure MyTravel is compliant with the terms of its Atol tour operator's licence, which imposes strict cash criteria to protect tourists from any sudden failure.
It is understood that regulators are becoming increasingly worried about the strength of MyTravel's accounts. The company warned at its annual meeting last week that the war in the Gulf had caused its already weak bookings to deteriorate.
In September, MyTravel renewed a £400m statutory bond lodged to cover the cost of repatriating customers if it unexpectedly ceases trading. However, in addition to the bond MyTravel is required to provide evidence on demand to show that it remains financially stable.
Under Atol rules, the civil aviation authority has the right to "revoke or suspend a licence in mid-term" - a move that would ground the company's fleet of aircraft. Tour operators are given written notice of such a decision, to allow them to make last-minute representations.
City sources confirmed that the CAA had held recent talks with MyTravel. A company insider insisted that contact had been "constructive".
MyTravel's shares slumped 10% to 9.25p yesterday as rumours swept the City of new problems.
The closing price valued the business, which takes more than 12m people a year on holiday, at just £47m.
MyTravel's founder, David Crossland, stepped down as chairman this month, having delayed his retirement last year to try to rescue the ailing company, which has brands including Panorama, Cresta and Going Places.
Formerly known as Airtours, the company ran into trouble under its former chief executive Tim Byrne.
It struggled to recover from a slump in bookings following September 11, 2001 and faced a further crisis of confidence after the emergence of problems with the way it accounted for holiday insurance.
The group's new chief executive, Peter McHugh, revealed last week that summer bookings were running 3% below last year's levels, while bookings for winter 2003 were down 4%.
In November, MyTravel agreed a £250m refinancing with its lenders, giving it credit facilities until the end of the year. Talks are under way with banks to put its debt on a longer term basis.
Among the CAA's criteria for tour operators is a requirement that "free assets" - including buildings and aircraft - are equivalent to a certain proportion of turnover. The CAA can demand monthly and quarterly updates on the state of a company's balance sheet.
An industry source said: "They have the right to ask for information at any time and they can ask for pretty much any information that they want."
The CAA said it never discussed its dealings with Atol holders. MyTravel insisted it was "fully bonded" under CAA regulations.
MyTravel recently risked inflaming criticism of "rewards for failure" in the City by agreeing a £1.2m payoff for Mr Byrne, who left in October after losing the confidence of fellow directors.
Former finance director David Jardine, who left a month later, received £840,000 in compensation.