Air Tours & First Choice in bank funding risk.

[Nightflyer]

From today's Travel Weekly:
Air Tours and First Choice may cease trading due to the potential loss of vital bank funding, while Thompson owner Preussag is also considered a risk. The assesssment by City analysts at ABN amro comes as the bank also predicts that profits at the big three operators will be down around 30% next year and bookings will still be 15% down for the summer 2002. The biggest worry for operators is that a lack of cash-flow may jeopardise guarantees with banks to protect bonding for Air Travel Organisers' Licences. ABN Amro has revealed that Airtours and First Choice's exposure to the industry downturn could have a damaging impact on income. Operators may not have the net assets of 3% or 4% of next year's turnover needed to meet banking requirements, which allow Civil Aviation Authority and ATOL bonding.
Preussag is considered less of a risk than its rivals because they are more exposed to destinations, such as the US, Turkey and the Middle East, which are expected to be severely hit by a downturn in demand.

[kinsman]

Airtours - This does not really fit with any information to share holders in terms of assets. Nor does it tally with the companies statment on secured credit lines for next year. Sounds like another journalist/analyst who is looking for a story to me.

At least I hope that is all it is. Share price does not seem affected anyway, so I guess the city does not buy this either!

It really is way to early to be talking about next years profits, this year has been good despite the problems. We won't see the real long term effects for a month or two yet me thinks. Wait and see is the answer I don't think it very likly the banks will pull the plug on basically sound companies who are restructuring their operations to cope with changing demand as we speak. Would not please the banks share holders at all!

[ 24 October 2001: Message edited by: kinsman ]

[fueldump]

"Preussag is considered less of a risk than its rivals because they are more exposed to destinations, such as the US, Turkey and the Middle East, which are expected to be severely hit by a downturn in demand."

Eh don't you mean LESS EXPOSED"