MYT Results

[AdrianShaftsworthy]

Ok, I'll go first. Almost £1 bill loss. What future MYT now?

[TightSlot]

Thursday 11 December 2003

BREAKING NEWS: MyTravel: UK operating loss of £325m, profit in 2005

MyTravel has reported an operating loss of £358.3m, with the UK business losing £325.4m.
The loss on ordinary activities before tax is £910.9m. Exceptional items totalled £472.7m, with £359.3m accounted for by a review of its balance sheets.
Chief executive Peter McHugh said that the losses were due to ‘legacy and one-off issues, structural issues and poor management information systems'.
McHugh said that the group would return to profitability in 2005

[spy]

No answer to that question! But one would have to say the future is not bright! At best the company will see some big changes!

My concern is now for the whole industry, if a company the size of MYT go down then most banks and insurance companies would walk away from future underwriting of ATOL bonds. That will mean companies will need to be self-insured and the impact of that could be a disaster for many!
:(

[PA38]

If you where the man on the Clapham omnibus who would you book with for next year:confused:

That is the problem Mytravel face:sad:

[rupetime]

Yes the failure of MYT would create a lack of confidence in the industry in the eyes of the insurance obligors that offer bond coverage however any failure of this size would reduce the current glut of overcapacity in this sector.

Only time will tell but its a very big hole to trade out of in an already depressed market.

rt

[spy]

I doubt it will affect long-term bookings but certainly short-term bookings will suffer. Passengers have short memories! How many can tell you who they flew with and often they don't know who they booked with either. If MYT are still around in a month or two the passengers will forget the news or figure the problems are over. They are used to these kinds of shock losses with UK companies and seeing them survive.

However, your write the short-term bookings will no doubt go through the floor. The press will have a field day with this and no doubt drive the company out of business!

ruptime

With Easy jet getting 120 new aircraft over the next few years with options for more and the start of several other low cost operators, I fear the long-term outlook for the holiday industry is bad even with the possible departure of MYT.

[newswatcher]

Spy,

You give the press too much credit! Any failure of this company will be due almost entirely to poor decisions by MyTravel management, past, present & future! Even now they admit they have vastly underestimated the cost of restructuring, surprising probably all of the financial pundits. Interestingly, the turnover stayed much the same, slipping slightly down to £4.2bn from £4.4bn previously. Strangely, the share price has risen by 25% in early trading, nice investment gain for some! However, the £100 bond, due for payment in 2007, is now trading at only £17!

Now worth £50m, surely time for a bid!

[A4]

Newswatcher I think the point Spy was trying to make is that the press can report this in one of two ways.

They can (and probably will) put a huge anti/don't book slant on it which will harm bookings - self fulfilling.

Or they can say that the losses are colossal (no dispute there!) but almost two thirds of that is one off items (selling loss making business, assset write offs etc). The banks are still backing the Company (representatives on the board I believe) and that a huge cost saving program (forecast to beat the £150 million per year by 2005) is being implemented along with a massive restructuring (simplification) of the business. It is forecast (hoped) that this will put the group back in profit by September 2005.

The second scenario shows that everyone within MYT is fighting tooth and nail for their survival and with a bit of faith/luck/backing it should survive. There's 30,000 people facing a pretty uncertain future - but the press don't seem too bothered about that aspect, just as long as their papers sell.

A4 :(

[MELmonkey]

If MYT fails then that will probably scupper my plan of changing employer next year. That and a sense of decency means I wish them to survive very much.

However. Surely now the writing is on the wall?

I'm no financial analyst but a UK charter firm that looses money in the Summer is surely a non-starter? I know the banks will want to trade out of this to avoid a massive loss but there is only so long they can afford to watch the company loose millions of pounds a day.

Can someone please clarify exactly how many flightdeck crew MYT employs please?

I am confident that they will be in the marketplace for a new job within 6 months and I want to get a feel for just how significant that will be. Hopefully for them all the orange Airbuses might just come on stream at the right time.

Regards.

[A4]

Flight deck = approximately 400 to 500. Banks seem to be in for the long haul. Refinancing is in place till May 2006 and Bond holders till Jan 2007. Don't forget £450 million of this years loss is a one-off exception. Operating losses were "only" :rolleyes: £350 million - hopefully reducing next year and to profit by 2005.

A4:)

[newswatcher]

A4,

I hope you don't think that "the City" reacts only to what it reads in the press, and it is there that the survival of MyTravel lies at present. Peter McHugh forecasts profitablility by 2005, I really am struggling to see where he is going to find the money to repay the £1.3bn debt mountain that has built up.

I think spy undersold some of MyTravel's clients. If they have had a great holiday with MyTravel/Airtours in the past, I am sure they will go again, particularly if ABTA continue to show their support, as detailed in the Guardian today This reassurance was borne out a spokesman from Abta, the Association of British Travel Agents, who said that MyTravel, like all tour operators in Britain, is by law covered financially in the event of it going under. What a dilemma for staff. They must continue to give the clients the "holiday of a lifetime" whilst wondering where their future lies. The more they do so, the more likely clients will make repeat bookings. Keep up the good work! :ok:

[fr8ter boi]

CEO was on the radio this morning taking great pains to explain that the company had enough cash to survive the winter and into next summer holiday season. But for how long?

If I was booking my summer holiday now - it wouldn't be with MYT! Looks like Easy will get all the bus rated pilots it needs.

[FMC]

A pre-tax loss of £350M is still a massive blow to any PLC even my travel. The real issue is that of perception and the stock market is all about that. The problem is that the UK public have started to switch from package holidays to self booked holidays using the internet.

Peter McHugh's statement that a main factor was the hot summer for the slump in bookings. I don't think so. That's like saying that 30% of their customers only book their summer holidays in June!!! Profitable in 2005. I don't think so, without a wholesale sell off. I would bet that there are several risk management meetings starting in the City as I write this.

The problem is that these large package holiday companies are a bit like the major record companies. Serving an ever decreasing market! Not a bright future.

FMC

[spy]

Newscatcher

A4 was on the money regarding my point of view! The UK press love bad press and can and have made matters worse for companies in our position.

Yes our troubles are down to the poor performance of the Directors, but the press are not a responsible body they print stories that sell papers and to hell with the truth or consequences on many occasions.

Frankly the British press is a disgrace. I am not just referring to MYT but many issues. How many individuals have been put on trial by the press and found guilty at the whim of some hack reporter only to be cleared by the courts having been put through hell?

Newscatcher the press have enormous power they can make and brake companies and individuals. Much of that power is in the hands of people with very little integrity.

Sorry I have drifted off subject but I feel very strongly about the state of the UK press and it’s low standards of reporting.

Out of interest MYT have around 56 aircraft not all of them Airbus. Easyjet are getting 120 aircraft over the next few years, they will need a lot more pilots than currently employed by MYT. Many MYT pilots may well want take jobs with other operators.

[TightSlot]

MYT is in mortal peril. There seem to be a selection of defence mechanisms being employed on PPrune that I believe are questionable.

1. This has been caused (or at least fuelled) by the Media, and the Daily Mail in particular - The Media only report on what is actually happening. They may slant the reporting according to some inbuilt bias, but that is hardly a surprise! Politicians experience this every day. Newspaper Readers are familiar with the bias of their chosen publication, and tend to buy it because they feel that they can manage the bias on an informed basis, or because they agree with it. If MYT hadn't put themselves in such dire straits in the first place, then Media bias would not be an issue.

2. A failure at MYT would be bad for the industry in general - No, it wouldn't, it would be good for the industry, which presently suffers from overcapacity. Granted there would be many subsidiary problems, some significant, for other airline staff, and some other companies, but when set against the overcapacity issue, they are minor. Of course, overcapacity will return at some point in the future, since it is a recurrent industry problem.

3. A large percentage of the posted losses are exceptional one-off costs, and the company will soon be viable once more - And a large percentage are not. This company has lost a fortune, and managed to make a loss during the only period of the year when it is difficult to do so. Banks, shareholders and Bond holders are supporting it because they stand to lose much more money if they don't. They have, in a manner of speaking, nothing to lose, having lost much of it already: Of course the future prospects will be talked up, as the alternative would be suicidal (as demostrated by Gordon Brown yesterday). MYT debt is enormous, and profits are already swallowed up for several years to come, so do we really expect many investors to come knocking on the door waving a cheque?

4. Bookings and loyal customers will return - Really? The point is that none of us know. A percentage of future customers will not be aware of media coverage, but how big is that percentage? Let's face it, if you were Joe Public, and you had read or were familiar with the situation, would you knowingly put £1K - £2K of your hard-earned cash into a holiday with MYT?

5. MYT may be in a bad way, but its' competitors are in just as bad a shape - No they're not. Even if they were, the Media, for whatever reason isn't reporting it as such, and the City isn't either, and that, for MYT, like it or not, is the problem at the moment.

6. MYT's troubles have been exacerbated by plotting from competitors - Of course they have? MYT would do precisely the same where the circumstances reversed. That's what happens in business.

7. MYT going out of business will put a lot of people out of work, so we should all support the company - Why? This is capitalism and the markets in action, red in tooth and claw: It's not pretty, but it is the nature of the beast. On that basis, we should all swing behind Pan-Am, Enron and Railtrack because of the impact of collapse. (Well, actually, as UK taxpayers, we did all swing behind Railtrack, although involuntarily and without being asked!).

I know that by posting this I'm running a risk of being heavily flamed, but please think first. I also work for a private company, a competitor to MYT: If/when our owners cock things up on an epic scale, (as they could well do one day) and we are in the same position, then I shall be angry too, but I'll just have to get on and deal with it. I don't wish redundancy on loyal employees of MYT, but I don't feel that some of the myths shown above should be used to protect them.

The real villains of the piece (and the only winners) are the past directors of MYT, who have mis-managed the company into its' present situation, and then awarded themselves generous leaving settlements as a reward, and not the Media, nor competitors nor the city (nor me). If I worked for MYT, I would direct my anger at them.

(Now edited to amend incorrect numbering)

[spy]

Your opinion is as valid as any other Tightslot! I don't agree with several points you have made but thats life!

The indusry may welll be worse off with the departure of MYT if the insurance companies and the banks pull out of the bond market.

There will be a short term up turn for the other tour operators but many of the MYT brands will survive.

Easy and the other low cost operators and the changing booking patterns will level any up turn out fairly quickly.

The papers do not always or even often print facts! That is a myth! They print often uninformed opinion.

[newswatcher]

Sorry spy, IMHO that argument just doesn't wash. I would love to see your attempt at "spinning" yesterday's results into a "there is absolutely no risk to booking your next holiday with MyTravel" story.

For example, would you now invest in Equitable Life? If not, why not assuming that they were still taking "new" business? What do you know about their problems, which would make you have second thoughts, and which hasn't been reported in the press?

The "Press Complaints Commission" is there to deal with miscreants, and has had some success, with the possible exception of the smarmy Piers Morgan. :yuk: If you don't like what you read in the press.....complain! I have, and have been generally pleased with the response. I was particularly incensed when photos appeared of the guy who committed suicide by jumping off a building in Edinburgh some years ago.

And it's "newswatcher", by the way! :O

[spy]

Sorry "Newswatcher" that’s the sort of mistake the British press would make!

I would not attempt to spin the story at all I will leave that sort of thing to politicians and the press!

The press complaints commission is great but by the time they get involved the damage is often done. I have complained in the past and like you I have been met with some success but once again by then the damage is done.

What a shame those with the power of the pen don't check facts and show a little integrity in the first place.

Perhaps it would be better to take this discussion to another forum.
;)

[Paterbrat]

Tightslot, rather a rebuttal than a flame however... I would disagree with some of your own Mystic Myths and Legends

1. It is commonly acknowledged that the press plays a huge part in influencing public opinion, they can will and indeed do undertake 'crusades' of their own that suit their owner/editors.
They most certainly will manufacture conjecture distort and otherwise slant affairs. I regret to say that your slightly sugery view of the press is by no means shared by us all.

2. That the failure of and throwing onto the market of thousands of airline staff not being bad for the industry is pardon my saying, an extremely cold and somewhat self centered view, but then you have described yourself as a tight slot, very apt.

3. Market forces as you so rightly pointed out fluctuate, and cycles what goes down can does and is capable of rebounding. The fact that losses albeit lage ones have been incurred has not always proved terminal as many companies have demonstrated.
You are simply indicating your particular wish or lack of faith.

Actualy 4. ( your grasp of maths is a tad inaccurate)
You said it! None, of us know, that incidentaly does not by royal decree exclude you, or do we unaware of your real identity...
(genuflects just in case)

5. Ahhh a man in the know, so they aren't in a bad way, nice recovery by the way" even if they are" ... Real cover your arse merchant aren't you?

6. No argument with plotting by competitors, your doing great so far.

7. You risk someone disagreeing with you... "but wait think first..." Having thought, regretfully, I will still beg to differ with your piercingly perceptive and somewhat defective analysis. It is as full of holes as a pair of fishnet tights, tightSlot ,and past mistakes are just that, past mistakes. Ongoing hatchet jobs however by competitors who hope for a company to go under and it's people to be out on the street should be accorded the contempt they deserve. "I'm OK jack" is the message coming across clear and loud from you, but it's the "and I hope you lot collapse" that is the sickening part.:yuk:

[steamchicken]

But it's not the press who lost the nine hundred million quid. Management did that. BTW, calling chunks of your losses "exceptionals" is the oldest excuse in the "Boys' Big Book of Business Bollocks" - BAE have been at it for years. How can it be exceptional if it keeps happening?

[LIMA OR ALPHA JUNK]

Spy,

Another spirited defence of MYT. You must think you are fighting in the Alamo at times ! The results are disastrous and if the new Chief Executive thinks MYT will return to profit in 2005, major surgery is on its way in the next 12 months.

The market, as you say is definately changing. Its a shame that the golden parachutists put MYT on this spiralling course with their flawed reading of the market. 2 successive summers have seen MYT flood the market with cheap seats as a direct result of misreading it.

Good luck to all at MYT for the next 12 months in what undoubtedly will be a very unpleasant period if they are to survive.

[spy]

No argument about who lost the money!

I believe the problem with the exceptional losses stems from not getting all the bad news out last year when they had the chance! My guess is the current team did not have the information as the auditors and former directors had made such a mess of it.

Fact is our management have not performed as well as the staff who have worked their socks off to get this company back on track!

Are we angry with our management team? You bet but life goes on.:mad:

Lima, I think the Alamo was a cake walk compared to this! I agree we will need to see some very big changes and a lot of pain before any profit is made.

[Oblaaspop]

Yes the companies performance is crap, no denying that, but if anyone thinks that 532 qualified, experienced, type rated airline pilots (No, I havent forgotten the 25000 other people in MYT, but this is a pilots forum) suddenly thrown into the marketplace is not going to affect their own cosy little world then think again.....

It will affect terms and conditions, lifestyle issues, and more importantly your PAY for years to come, people just starting their career path, low experience collegues working for commuter airlines not being able to switch jobs (I could go on but I think you get the message) etc etc.. So the 'I'm alright jack' attitude of some 'thicko's' on this forum is very ill placed.

You know what, maybe some of us are burying our heads in the sand, but MYT remains a good place to work, with some of the best flying in the industry and a good bunch of guy's to boot, so forgive us if we dont bend over and take it up the wrongn', just because some who 'PERCEIVE' that they are in a better position say we should...

Rember, exactly the same thing were said 14 months ago, and if we were to take it all on board as fact we should have gone bust 7 times in the last year according to the Daily Mail alone, let alone some of the self-ritcheous tossers that frequent this bulletin board!!!!!

Now how's my Emirates application going?????????

[spy]

Said with feeling!;)

[Helen49]

I am afraid that Tightslot has an incredibly naive view of the press. Regretably the media do not only report the news with a slant, they infrequently make it up as they go along. They make little effort to ensure the accuracy of their reports, when there is an absence of facts or a deadline to meet the story will be fabricated. We see it all the time in accident reporting and not just in our industry. There are many good things happening in the rail industry but how many of these do we hear about? The media thrives on bad news stories, and when necessary will go to whatever lengths are necessary in order to produce them. The media is capable of governing the thinking of many people and for that reason is a serious threat to society.

The media will only dwell on the bad side of the MYT issue and are likely to exacerbate rather than improve things.

[beamer]

Fact - MYT are in the dwang but IF they were to go down, bad news for the industry as 500 type-rated pilots suddenly fall onto the carpet. Low-time, low experience pilots have no chance of moving up the ladder, military guys less chance of a good job to begin their civilian career, competitors eager to fill gaps will offer MYT pilots short-term contracts for the summer and then cast them adrift, pilots in similar outfits will see there terms and conditions eroded ( CP- pile of cv's on my desk boys !) and command prospects lengthened. All in all not good for pilots in the UK despite the very real fact that the IT market has over capacity in respect of holiday companies, airlines and staff.

The good news for MYT may be that the banks and other financial institutions have put so much money into the company that they may give them another lifeline in the hope of some return in the future rather than have an industry 'garage sale' of assets in order to minimize losses.

I have never understood why it is that c**p directors a little like football managers get paid huge payoffs when they jump before they are pushed - how on earth do the shareholders allow these
clauses in contracts in the first place ?

[sky9]

Two points.
Firstly don't be swayed by loyalty. The Directors now doubt have walked away with the salary for their contract period.
Second: Look after yourself. The IT industry in the Uk has always had companies going bust. Whatever happens to them, there will still be jobs in the UK for Airline Pilots so get out and look after No 1. You don't earn points by being the guy who turns off the lights, the liquidator does that.

[timzsta]

I was made redundant when Buzz was going bust and got taken over by Ryanair earlier this year. I wouldn't wish redundancy on anyone. I am also getting close the gaining my fATPL and the job market was just showing signs of picking up. That will not be the case if MYT goes out of business. I may have to stay dispatching for a bit longer then I hoped.

But facts have to be faced. These are huge huge losses for a company the size of MYT. Consumer confidence, as people have said, is going to go through the floor. People are going to go to different operators for their hols. That is not going to make things any easier in the short term or the mid term. There is over capacity on the charter market and the low costs are doing lots of damage. It is only time before the locos start moving in on markets like Greece with flights to places like Corfu, Zakinthos and Thessaloniki as flying times are only about 30mins longer then some of the lengthier spanish routes. That will further affect the likes of MyTravel.

I am sure the CAA will be keeping a close eye too on whether it feels MYT can be allowed to continue to operate given its cash flow problems. Other suppliers to MYT (fuel contracts, catering, handling agents) might get worried about things and withdraw services too.

Granted the banks are still propping it up but there will come a time when they say enough is enough and pull out and attempt to recover some of the losses by selling what assets remain.

I could yet see and opportunists buy out as with Buzz/Ryan. £50m is current valuation of MYT, am sure Easy could afford it. Slots at places like Gatwick/Manchester/Stansted/Birmingham could be very useful to Easy. Get rid of the long haul fleet to offset the cost of initial purchase and integrate the A320's into the Easy fleet on high density routes.

I hope MYT survive, I really do. If they dont, please may I not be half way through an MYT turnaround when the plug gets pulled.

[Lou Scannon]

It would be nice, for once, if the Chief Executive issued a public apology, Japanese style, for the blindingly sheer incompetence of the directors past and present who have driven a company that employs 25,000 to this level.

Every other company of this type must surely be looking into ways in which they can avoid paying such fools for their failures.

[carlos vandango]

I can't see EZY or anyone else bankrolling MYT to the tune of 900 million for the sake of a few slots. Perhaps the airline will be separated and sold as MYL who knows?
I've said it before and i will say it again, GOOD LUCK to all those at Mytravel. It is a disgrace that directors can pillage companies to this extent and get away with it.:(

[TightSlot]

Lou

Quoting from e-tid (again)

Within the £373.9m exceptional operating loss, the largest deficit is £300m of writedowns. £4.5m is set aside for directors’ settlements, with £10.1m in advisory fees related to the restructuring of the company rather than its refinancing.

£4.5m for cocking up: Nice work if you can get it - If there's an apology at all, it will be given from the inside of a rolls-royce

:(

[CaptainFillosan]

A flight attendant as a beancounter? Why not - I suppose! But I don't like the figures.

What has not been mentioned, but I may have missed it is, that MYT have written down a major portion of it's assets. That is a savage action and one which would not have escaped the money men. However, their shares rose by 25% today and God know's what that means! I guess some think that the CEO's estimate that they will be in profit by 2005 helped. Breath held! But not for that long.

It is, in anybody's book, dire, and it has to be faced up to. Just how much cash IS available as working capital is not known but unless the MM are happy it won't last.

[BoeingBoy]

I have posted the following report from Yahoo Business on our Air 2000 forum for information only. However the mention of reduction in fleet size from 56 to 47 is worthy of note as presumably this is going to involve associated pilot redundancies. Best wishes to all at MYT

_____________________________________________


MyTravel upbeat despite huge loss
By Lara Smith

LONDON (Reuters) - Crisis-hit holiday firm MyTravel Group says its annual loss has widened by more than 10 times but it had enough cash to survive to next summer.

The firm posted a pre-tax loss on ordinary activities of 910.9 million pounds for the year ended September 30, compared with a 72.8 million pound loss the previous year. Analysts had been expecting a loss of about 600 million pounds.

"We are confident that we will continue to operate and that we will be successful in the turnaround," Chief Executive Peter McHugh told BBC Radio 4 on Thursday.

"We have cash to make it through the winter. We have a turnaround plan that we expect to bring us back to profitability by 2005, (and) even though the numbers are dreadful, they are optimistic at this point," he said.

The indebted tour operator, formerly known as Airtours, has sold assets to raise money as it strives to recover from a series of profit warnings and accounting errors, which sent its shares into freefall from over 500 pence in 1999.

Its stock, the third most heavily traded in London by number of shares on Thursday, was up 17 percent at 10.5 pence at 1120 GMT, after earlier reaching as high as 12p.

One analyst, who wished not to be identified, said that although MyTravel (LSE: MT.L - news) 's results were worse than expected and its outlook for a return to profitability was a year later than previously seen, the shares rose because the travel company eased concerns that it might not survive another year.

The announcement did not lead analysts to change any recommendations or targets, however, he said.

A trader said the shares rose because people were moving to cover their positions after selling the stock as low as 7p.

TURNAROUND PLAN

MyTravel said it had refinanced its 1.3 billion pound debt to May 2006 and extended 221.6 million pounds of convertible bonds to January 2007.

Its turnaround plan includes cutting its aircraft fleet to 47 from 56 and reducing the number of cruise ships it operates, McHugh told journalists.

Disposals of four U.S. businesses provided working capital of 144 million pounds. It also sold its loss-making German and Polish operations and was consolidating nine UK businesses, including Airtours Holidays, MyTravel Airways UK and Going Places. No further disposals were planned, McHugh said.

Holiday firms across the world have been struggling with a slump in tourism due to the SARS outbreak and Iraq war.

MyTravel fared worse than most because it had ramped up capacity in a bid to capture market share, leaving it exposed to high fixed costs and price cuts when the market slumped.

Bookings for winter 2003/2004 are down about 17 percent, in line with the company's expectations. Bookings for summer 2004 also are down on the previous year, but margins have improved, the firm said.

Earlier this week, rival First Choice Holidays (LSE: FCD.L - news) said summer bookings in its main UK business were about 20 percent below the same time last year, although it said it was confident business would pick up.

McHugh said exceptional charges of 472.7 million pounds were due largely to writing down costs of holidays that didn't sell and to poor management systems, which affected its ability to make reliable forecasts and led to incorrect pricing of holidays.

Holidaymakers who had booked with MyTravel were at no risk of losing their vacations, McHugh stressed.

John Allkins was appointed group finance director following a spate of boardroom resignations.

[Ranger One]

MELmonkey: I'm no financial analyst...

My wife IS a financial analyst. As the above quote mentions, don't make too much of the 25% rise in share price - people did have positions to cover. And 25% of ****** all is still ****** all.

Her overall verdict? "My Travel? That's the one we all call Might Unravel - they've completely taken their eye off the ball, just compare with First Choice..."

:(

R1

[EPRman]

Several weeks ago the subject of MyTravel was brought up at our annual Company Briefing made by our DFO and Chief Pilot. The DFO mentioned that the rumour at board level was that the CAA was ready to call in MyTravel's ATOL bond in April of this year. However, the Transport Secretary stepped in to prevent this as the demise of the MyTravel at that time would be seen as a high profile casualty of the Iraq 'war' and would be disastrous PR for the government. Consequently MyTravel was allowed to carry on trading and apparently pay a reduced bond to the CAA. This has been viewed as unfair competition by other tour operators who have made representations to the CAA objecting to this.

Government involvement seemed to be backed up by this paragraph from the lead story in the Manchester Evening News whose headline shouts "Travel giant hit by £900m losses":

"Andrew Monk, of the London firm Oriel Securities said he believed Transport Secretary Alistair Darling may have stepped in to help prevent the company collapsing and avoid the headache of having thousands of UK holiday- makers stranded abroad."

I thought that's what the ATOL bond was for. However, can anyone substantiate these rumours and also explain what role the CAA plays in a situation like this?

[driftdown]

I am writing a shareholder, OK not a lot and bought when I thought the shares were on the up and now 50% down. Still I am not going to sell, easy to say when I do not have thousands or millions on the line. Call it misplaced loyalty if you like but I think all the staff at MYT deserve support.

On the other hand the Directors that got them into this mess should all be falling on their swords. A disgrace that such a monumental cock up should be rewarded with a golden pay off :yuk:

Good luck to all at MYT

Driftdown

[spy]

EPRman

I heard that story as well; my information is it originated from the boardroom of one of MYT's competitors! The CAA will not pull the bond as long as the Banks support the company. Remember the CAA is a private company and as such could find it's self on the wrong end of legal action by the creditors if it pulled the bond from a company that was being supported by it’s banks.

As I mentioned earlier in this thread there is a concern over the Bond market. This is the reason there has been a move to include flight only in the ATOL bonding scheme to make the market more interesting to banks and insurance companies. If the bond were pulled or MYT failed, many who provide that cover would no longer underwrite tour operators. In which case the tour operators would be forced to have the cash reserves to be allowed to operate. None of them could afford that in today’s market.

[wasdale]

Is this not just further proof that beancounters can't count their beans? The only people who understand how to run airlines are pilots. I have had six redundancies, all from companies which were run by accountants. If MT go down the drain the management will walk away laughing, nests feathered, while the employees wonder why they put in so much effort to keep it going.

[miss d point]

Can someone enlighten me ?

Mytravel outlets have changed their name back to Going places, maybe in attempt to disassociate the loss from the public ?
Who is going to pay for all the 'not' travelling public if the banks pull the plug ? ATOL ?
Does anyone know how much money they have or are prepared to throw in ? surely this could start affecting other businesses ?

The average 'JO' in the highstreet who doesn't read the finer points of the FTSE probably doesn't have an endless supply of funds thanks to Gordon, so if the banks pull the plug will he have to wait a while before he gets his cash back ? - miss his holiday all together ?? someone may have to pay for all these people to get their money back ?

[codpiece face]

Some of you make make me laugh with your falseness, you rave on about how myt are rubbish and then at the end you finish with oh and good luck wouldn't want anyone to loose their jobs.

It is said tongue in cheek because you really feel that with one of the big four out of the way your jobs will be more secure. daaaa, what do you think will happen, do you really think the locos will sit back and let the other big three absorb the business I DONT THINK SO.

What will happen is that a base that may have been border line suddenly turns into a viable operation, I dont see any of the other three with lots of planes on order with work to find for them. The other problem is that there will be more two bit cowboy outfits trying to muscle in on the action.

you may be thinking there but the grace of god but sooner rather than later you may be on the receiving end and really dont expect any sympathy.

[kinsman]

miss d point

I understand your concern. The name change back to Going Places was cheaper than continuing to change all the stores to MYT! So don't look for hidden meanings where there are none. Also Going Places sell holidays for other operators out of interest not just MYT products!

The holidays are fully bonded and you will get your money back in time to book your holiday again! If you are away you are still fully protected, even if the CAA pull the bond which they won't as long as the banks are behind the company which they are.

Alot of the stories running around are spread by those who want to see MYT fall as they think it will make them safer or just because they like bad news!

MYT would already be gone if the banks or the CAA did not think it was going to continue trading, they knew about the state of the company long before it hit the papers yesterday, it was old news to them. You are safe to book holidays with MYT, fact!

Out of interest if you make your own plans and go with a low cost operator and book your own hotel etc. the only protection you have is your credit card insurance! So you are much safer using a tour company, even one with money problems.

Another point of interest is MYT and First Choice are the only UK owned tour operators, so buy British! The others are German owned!
;)

codpiece face

I agree the falseness makes you want to loose your lunch at times!

[tailscrape]

£910 million. Oh my god.

I can't see a bid coming, because whilst parts of the business may be worth more to sell individually than the whole company is currently on the LSE... the risks are too great for any buyer as are the debts.

Will the CAA lose it's nerve and withdraw it's bond? The competition at First Choice went on record saying that it would be a disaster if MYT failed during next summer. A disaster for the public that is...not themselves. So, perhaps the oppo are talking the CAA into action already?

Additional small scale problems that MYT may face that could exacerbate the issue is if lots of experienced managers, pilots, crew and other staff start to walk in large numbers.

That would just add more costs to an ailing situation. Let's hope not though.

Whilst, I have had differences with SPY, KINSMAN and FLEX42 (I know you don't work for them) on this subject in the past I hope that you all are kept employed...either in a new mean, lean MYT or elsewhere.

But, the time is here now for BIG action and not sticking heads in the sand. The press are NOT responsible for MYT's woes. Crossland and Byrne are. The pain should have been taken in 2001 like it was everywhere else virtually.

Good luck guys.

MAYDAY. MAYDAY. MAYDAY. Kestrel 123 etc.

:(

Edited for a spelling whoopsie.

codpiece face,

i don't think the loco's will impact as much as you think.

A lot of MYT's business is longer sectors than the loco's will get involved in.

[kinsman]

I was wondering where you were?

Spain is still our main market!

[steamchicken]

There are two reasons for the shares of a firm in this situation to rise - 1) short covering and 2) a perception that it can't get any worse. But as someone once said - Going to the Hippodrome is like staring into the abyss and deciding it's not that deep! I can't see them trading their way out of this, especially given the asset writedowns - if there is a solution it'll be a breakup.

[kinsman]

Heard it all before! We are still here!;)

[Paterbrat]

And may you all have a prosperous New Year, was never said with more feeling.

[Thesaurus]

The city seems to have gained some confidence in MYT, judging by the rise in the share price.

I wonder which company "the spotlight" will fall on next?

Maybe tailscrape could enlighten us?

[Paterbrat]

Management Directors and some staff have been having meetings, some searching questions after the 'lets all get down to it ' bit. But then again what alternative is there. Once again the staff will get down to it as they have been doing, all hands to the pumps because the alternative is that the ship goes down with all that entails.
Despite the gloomy situation all is not yet lost, the vessel is still afloat, and as history shows, it is not over untill the calorificaly challenged maiden warbles, and she aint done that yet!

Happy Christmas to all MYT staff and may the coming year be a better one

[kinsman]

The biggest Mytravel asset has always been is its staff! Great bunch of people! What a shame those at the top have not taken more care of them at times.

Modern management culture only seems to see balance sheets; they rarely see the hard working folks who make the money for the company. Just a fact of modern life, it is no different in most companies. It does make me want to spit when I see failed directors walking away with big sums of money for doing a piss poor job! About time the corporate world made these ******s pay for their mistakes like the rest of us. Like that is ever going to happen!
:mad:

Anway enough of that, Happy Christmas and I hope everyone has a good New Year whoever they work for!

[Hulk Hogan]

MYT will survive! Saw a report on sky news and they were saying that the banks could not afford to let the company go under and the only option is to trade out of it, they also mentioned that the goverment may get involved because they say MYT cannot be allowed to fail for the same reasons as the banks.

Good luck anyway I'm sure it will work out in the end.

[EPRman]

With reference to the Sky News item Hulk refers to, why can MyTravel not be allowed to fail? Why should the Government stick its meddling snout in? MyTravel operate in a highly competitive environment and faced the same problems as everyone else but have made a right pigs ear. It's got nothing to do with the Government.

[Paterbrat]

Oh sh*t w'eve got a porker running round sqealing... oh... s'ok relax everybody it's not a girly. (sighs of relief all round):p

[Hulk Hogan]

They said simply because it owes far to much money, don't know what the goverment can do, but that is what i saw on the news on Thursday.

[brakedwell]

I seem to remember the pundits saying Laker couldn't go bust because the banks were owed too much money.

[Air Mail]

I wouldn't hold out for the government helping....look what they done for Railtrack plc.

As far as the banks are concerned, to keep them afloat, they will only be interested in what assets MYT have and what future potential business they can generate. If they can see a future market they will probably issue a debt for equity swap and more or less take over the company diluting current shareholder value.

MYT only have a market value of approx £50m, against a colossal loss of £900m, and that after the busy summer period!

If they see no future, then losing the money owed is a small price to pay. Last year, most of the major banks wrote off millions in third world debt loans, but still they made billions in their own profits.

[El Grifo]

There certainly seems to have been a sea change in the last day or two, following the profit announcement.
I had My Travel on the blower yesterday, offering me Photoshoots in Barbados, Dom Rep, Goa and Cuba, take yer pick they said!!

This has all to take place in February.

I remember last year at this time; they sent me off to Thailand on a three-week shoot.

Ye'll never get paid the pundits cried, they are going bust!!

A year later, My Travel is still here and still planning for the future!!

Happy Christmas to all at My Travel, booger the doom-mongers.



:O :cool: :O

[maxy101]

Let us not forget that the banks don´t lose their money...they are losing OUR money.....

[NACUD]

Those that have a genuine interest and understanding of the headline loss that MT has announced will realise that the true figure is considerably less than £910m. An appreciation of write offs and write downs is needed, as well as an understanding of accounting practices.

In the past the previous Directors had vastly overvalued the assets of the Company and, I suspect, used accounting practices that were right on the edge. For this they paid themselves handsome bonuses.

If MT had made a “genuine” £910m cash loss during their last financial year they would not be here now and I am sure the banks would have pulled the plug a long time ago.

As part of the £1.3 billion financial restructuring agreement with the banks a £250m overdraft facility was arranged and an agreement that the banks would pay the £400m ATOL bond if MT ceased trading. Other lending facilities were also agreed enabling MT to have the use of £1.3 billion. For this financial arrangement and the agreement reached with the bondholders MT will pay a handsome fee.

Quite rightly the banks, the CAA and the Government have followed the fortunes of the Company closely. A number on individuals on Pprune, as well as competitor companies, have suggested that the CAA call in the bond thereby sending MT into administration. It would appear that the CAA is reasonably content that, for the time being, the Company has the backing of the banks as it restructures the business. To my knowledge the CAA has never called in the ATOL bond or revoked the licence of a major company, the banks have always acted first. If the CAA were to act first, without the support of the banks, they may well leave themselves open to legal action from shareholders, for stopping a company from trading. As a reminder, the banks put ILG/Air Europe into administration and not the CAA.

The really big shock came over a year ago, when after a series of profit warnings MT made an operating loss, and the Company nearly went down. Unfortunately, further mistakes were made with the pricing of holidays this year which has only compounded the situation.

It would appear that the banks are satisfied with the plans going forward to return the group to genuine profitability in 2005. The £144m for selling the American businesses has been received and along with income generated from sales of holidays, MT should be in a position to continue trading thereby giving it some breathing space to get its act together.

No one in the Company is in any doubt as to the difficulties that lie ahead and the next few months will be crucial for summer 2004. The tour operator has reduced the number of holidays on sale for next year by over 17% and there should be a much better use of aircraft, thereby reducing the reliance on 3rd party flying. This could well provide some worries for other airlines.

So for those of you who are climbing on the band wagon, for whatever reason, and adding fuel to the fire by suggesting that the rug should have been pulled from under the Company, I would only hope that you never have to endure the ups and downs that the employees in MT/MYT have had too. And if you do, you will certainly appreciate all the genuine support of colleagues in other companies.

[buzz boy]

Best wishes to all at MYT. Hope it is a good christmas and a prosperous new year for all.

It is not nice living under a cloud of uncertainty, we have had so much of it dealt to us at KLMuk by KLM, (demise of Buzz/ AirUK etc) i would not wish it on anyone.

[kinsman]

Maxy101 how do you work that out? Do you have money in all the banks who are lending MYT money? I don’t think so! If the government bails us out then it's our money. I don’t see that happening frankly. The Government cannot afford an Enron scandal and that is what this would be! Having said that I don’t think you need worry they are unlikely to put money into the company.

EPRman what is your problem? do you like the idea of 22000 folks being put out of work! At the end of the day this is one of only two major tour operators that is UK owned so I would think you would be pleased to see a British company getting some support!
:ok:

[Paterbrat]

NACUD thank you for that clear concise and informative post that pricks the sensationalist bubbles that we are so frequently the victim of, by the press, the misinformed, the doomsayers and the plain ill-wishers. Yes the money may well be ultimately from the depositers, however in view of all the other PC wacky schemes that money is constantly lent to, I for one am quite happy to see it going to a British company and a segment of the industry in which I am concerned, and where it at least stands some chance of being repaid, as opposed other massive write-offs that are incurred on a daily basis in the bank loan business.

[Memetic]

TheRegister is reporting that MyTravel's problems were caused by a screwed up computer system install...

http://www.theregister.co.uk/content/53/34517.html

Massive MyTravel losses blamed on botched IT system install
By Drew Cullen
Posted: 15/12/2003 at 15:22 GMT



MyTravel, the UK's biggest travel company, lost up to £60 on every holiday it sold last year. If that wasn't bad enough, the holiday group had no idea of the hole it was digging for itself - the firm thought it was making a profit of £40-£50 on each sale.

Upshot, MyTravel fell £911m to the red last week, of which the lion's share came from trading losses.

The company blames a botched IT system install for its woes. In 2001, the group put in a new £15m reservation system, from Anite Travel Systems to speed up computer traffic to and fro its Going Places retail shops. The system was also meant to interface with the group's new Oracle Financials installation as well as legacy systems.

In an interview with the FT, Peter McHugh, chief executive, takes up the story: "Other than being old, the old systems worked fine. The new systems were supposed to make things better but when you do a major upgrade, the systems need to talk to one another and have interfaces and as the new system was implemented and lost the interface between them."

MyTravel is not blaming the software, an industry standard (The FT notes that First Choice is also a customer and it produced strong figures last week), but "poor execution". This meant that important management information, including information on profit margin, disappeared in much of 2002. And no-one noticed!

According to McHugh, the systems are now at the stage where they talk to each other and are producing enough information to run the business properly - but "it's still not 100 per cent". ®

[pintofstella]

Results for financial year 2002-2003
Peter Mc Hugh

Dear Colleagues,

Recently we announced MyTravel Group plc’s results for the financial year 1st October 2002 – 30th September 2003. These show that the Company made an operating loss of £358.3 million before exceptional items and goodwill. The UK business accounted for £325.4 million of this loss. Taking account of exceptional items and goodwill, the Company made a loss before tax of £910.9 million.

While the £358.3 million operating loss is substantial, it should be remembered that it includes the £282.7 million loss from the first six months of our financial year that we declared in our half-year results in June.

Nevertheless, this level of performance is extremely disappointing. In this CEO Progress Report I want to go in to some of the details behind the result, and also outline the actions that we are taking to return to MyTravel to profitability.

Background to the results

Looking at the full twelve months of the financial year, the results that we have announced today are due to a combination of factors.

1. A significant proportion of the £358.3 million is made up of legacy and one-off issues which have substantially increased our trading loss. These include one-off costs associated with the sale of some of our businesses, as well as changes to our balance sheet in the light of both better information and the more conservative approach to measuring performance that we now use.

2. The Company’s structural issues did not enable us to respond to a very tough trading environment quickly enough. For a good deal of the financial year, market conditions in all three of our main markets – the UK, Northern Europe and North America - were very uncertain. The war with Iraq, the hot summer weather in Northern Europe and the UK, and the SARS virus in Canada all reduced booking levels. During this period, we were not sufficiently flexible to cope with market changes. For example, we had high levels of committed accommodation (particularly in the UK business) which we needed to fill. We also had aircraft capacity that needed to be utilised.

3. There were specific issues in the UK charter and distribution business – the single biggest part of the Company. Poor management information systems impacted that business’s ability to make reliable forecasts and to act on them. For example, poor decisions made in 2002 about the prices for summer 2003 products in the UK meant that many holidays did not cover their full costs. Weak trading in the summer 2003 lates market and cost control problems in the UK airline severely affected margins in this business.

The loss that we are reporting today reflects the issues that we were dealing with in financial year 2002-2003, which ended two months ago. Since then, we have made a significant start to turning MyTravel’s performance around. My aim is to restore MyTravel back to profit by September 2005, and I am determined that we will achieve this goal.

Starting the turnaround

At the time of the 2001-2002 results, we commissioned a Strategic Review covering all aspects of the Company. This was completed in Spring 2003 and gives us a clear plan for MyTravel’s turnaround. The Strategic Review made three core recommendations – reduce the proportion of fixed costs in the Company, improve asset utilisation and restructure the UK charter and distribution business.

We started working on these changes during financial year 2002-2003. In many cases, the financial benefits of these will only be delivered in future years (including this one) – too late to offset the losses from 2002-2003. We are in the process of implementing the remaining changes.

• Reducing fixed costs - Across the Company, costs have been cut in all areas. We have reduced commitments to guaranteed accommodation, especially in the UK. Out of necessity, we have also had to reduce the number of people we employ.

We have reduced the number of aircraft we fly - our fleet of four DC10-10s was retired, and we will reduce the total number of aircraft we use to 47 by April 2004. Our UK cruise ship operator, Sun Cruises, will permanently withdraw a ship from service in summer 2004.

• Better utilisation of assets – The effect of many of these changes is that we will have fewer assets, but they will be better used. It is easier for us to fill a smaller number of ships, aircraft and hotel rooms, than it was for us to find customers – who often give us low or negative margins – to fill the larger number of assets we used to have.

• Restructuring of UK charter and distribution business – This is well underway and involves the merger of the nine UK businesses in this area (such as Going Places retail stores, MyTravel Airways (UK) and Airtours Holidays) into a single organisation, with a single management team – led by Philip Jansen.

One of the most significant achievements of financial year 2002-2003 was the refinancing of the Company – a step that was vital in securing our future. In June, we reached an agreement with our bankers to extend £1.3 billion of credit facilities until May 2006. Three months later, we reached a settlement with the holders of our convertible bonds to extend these until January 2007.

These are both major successes that give us the time and financial space we need to turn round our performance and get back to profitability. The recent agreement to sell four, stand-alone businesses in North America for around US $250 million also gives us extra working capital that will help us implement the turnaround.

An additional element of the turnaround involves us exiting from high-risk, loss-making businesses, which are also non-core. Since October 2002, we have sold a number of businesses in this category, including our German business (Frosch Touristik), Vacation Express, SunTrips, and our operations in Poland amongst others. This move reduces the need for us to spend resources and effort on supporting such businesses, and allows us to focus on the core businesses which are the key to our long-term future.

These moves have put us in a strong position to deliver an improvement in performance this financial year. We are ahead of schedule on delivering the cost savings identified in the Strategic Review, and now also expect these to exceed £150 million.

New Group Finance Director appointed

I am extremely pleased to announce today the appointment of John Allkins as Group Finance Director. John becomes a member of the main PLC board and joins the Company with immediate effect.

Before joining MyTravel, John was for eight years Chief Finance Officer of Equant NV, the New York Stock Exchange and Euronext-listed company that runs one of the world’s larges data communications networks. Prior to this he spent nine years at BT Group plc in a variety of senior finance positions.
.
John Allkins takes over the role from John Darlington who has been acting as interim Chief Finance Officer basis since August. John returns to his previous role of Restructuring Officer, where he will play a major part in supporting the changes in the UK core charter and distribution business. I would like to thank John Darlington for all of his help and support over the last four months and welcome John Allkins to the Company.

Looking ahead

In the next few days you will receive a more detailed briefing from your manager about the results and how your particular area of the Company has performed. This will also cover the priorities that need to be acted on if we are to turn in a better performance for this financial year.

The plain fact is that we cannot ignore the results for 2002-2003. I understand the disappointment that many of you will feel about these results – I share that disappointment.

However, we must move on and continue the progress we are making in getting MyTravel back to profit. We have made a very strong start to this and have achieved a lot in the last twelve months, despite today’s results. We have a clear plan for getting the Company back to long-term profitability and we are implementing that plan vigorously.

We are now approaching the peak selling season, which, for most businesses, is the period immediately after Christmas. Every one of us has a role to play in ensuring that this period is a success. Our customers rely on us to provide them with great holidays – we should not disappoint them. We must do everything possible to maximise profitable sales and so avoid the sort of results we’ve seen today.

I know that all of you continue to put in a lot of hard work and effort on behalf of the Company. My thanks go to every one of you for your ongoing support and loyalty. Keep up the good work, keep your pride in the Company and keep the sales strong.

Peter McHugh,
CEO, MyTravel Group plc

[tailscrape]

All,

Well, Peter McHugh's open and honest letter to MYT staff explains a lot. It also fills in the holes that the likes of myself and others have been trying to guess at for ages too.

I hope that the turn around pland can be implemented and that the situation is recoverable, because as I have said before (as have others) a failed MYT is not really in our best interests in this game.

And that is irrespective of whether you work for any of the opposition.

Additionally, Tailscrape would actually like to APOLOGISE to a couple of MYT guys on here. kinsman and Spy in particular. I know how stressful this time has probably been for you, and indeed your families. Hopefully, you will see a better 2004 and 2005 going forward.

Tailscrape's views have been too forceful at times, and perhaps ill considered... even if they have not been incorrect always. I know what a stressful feeling is, and with hindsight the comments are probably un needed.

And, I am sure you will all be glad to hear that MY alter ego TAILSCRAPE is NO MORE! This is his last posting. For ever.

Tailscrape is dead. Long live Tailscrape.

Let's hope this ends the acrimony. Season's Greetings.:zzz:

[Paterbrat]

Spoken like a gent... err...he who was Tailscrape.

[codpiece face]

This obviously going to run and run and run, so lets all agree that at least to the dismay of some that MYT are going to continue to trade in the short term and hopefully for a lot longer. May I also say without any falseness whatsoever a merry christmas to all of my compatriots in the airline business, no matter which company you work for and lets hope for a prosperous 2004.

[breakscrew]

There seems altogether too much schadenfreude in this debate; what we all need is a healthy industry pulling together. There are enough people out there who want to see everything connected with aviation given a huge boot.
Good Luck to MYT, and a Merry Christmas to us all.:ok:

[Paterbrat]

Come on Tiny Tim, speak up now lad your coming in 1 by 2...

[Seeta]

I have trawled through most of the posts on this and find myself scratching my head, lots of financial analysis etc but where is the poor old punter in this ? Is this company on the ball, does it know what the customer actually wants ?? Who is its customer ? Would you book a holiday with it or go with another operator?

Seems to me lots of people have elected to go somewhere else, with someone else. What has it got to offer that makes you wake up shouting YES YES YES ? So why not sack the marketing team and refocus the product ? Other companies are doing OK and tourism is certainly growing.... Don't you just hate it when someone forgets to ask the customer what they want ? Or is it just greed and arrogance ??

Airtours started out OK, so where have they gone wrong ? Who lost touch with whom ? and why ??

[A4]

Seeta said "Other companies are doing OK".

One other Company is doing ok - First Choice. Thomas Cook and TUI are also struggling. TC has 17 (?) aircraft sitting on the ground in Germany at the moment doing nothing.....

MYT sold millions of hoilidays last year - but at a loss!! It's not a case of the punter deserting but a case of not charging the right price and not keeping costs under control. Hopefully this coming year will see a reversal of fortune with the problems of last year being addressed.

It is certainly tough times in the IT business at the moment.

Happy Christmas to all.

A4 :)