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MyTravel in financial trouble

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MyTravel in financial trouble

Old 19th Oct 2002, 10:13
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Strikes me that the problem in the industry is that everybody is undercutting everybody else.
We need more margins within the industry. The yields are just too low. (In all sectors)
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Old 19th Oct 2002, 10:31
  #22 (permalink)  

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Too right Icepack, but who is big (or clever) enough to start building margins whilst not losing custom to cheaper rivals...
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Old 19th Oct 2002, 12:08
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You do appreciate that this is the exact same scenario that pertained back in the 'eighties with Laker and Air Europe?

The likes of BA and PanAm were highly disenchanted that Laker was, as they saw it, creaming of some of 'their' traffic across the pond, as were BA and BCAL when Air Europe started operating short haul schedules to certain European destinations.

The solution then was to get the 'cheap' opposition out of the market place, by hook or by crook, usually, in the case of Laker at least, by crook
Old 19th Oct 2002, 17:26
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Still disagree CaptainFillosan .

Accounting standards in the UK are open for interpretation and Deloittes may well interpret things more strictly than Andersen's had in the past, but that doesn't negate the directors responsibility over the accuracy of the accounts.

While Andersens may not be wholly innocent, this is not a result of Andersens' "dodgy accounting practices" as you put it. It is a result of the accounting policies the directors chose to adopt. Andersens interpreted the standards one way and signed off an opinion on the truth and fairness of the accounts. Deloittes decided that this was too agressive and said they would not sign without revision.

And beware when quoting Enron. Up until the moment the Houston office got the shredding machine out, you may well find that Andersens did nothing wrong over Enron. The treatment of the offshore vehicles in the Enron accounts was wholly in accordance with US standards. Andersens are a scapegoat for the failure of US legislation - which they proclaimed to be the best in the world!
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Old 19th Oct 2002, 18:09
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FLS line maint will prob finish off 'Y' Travel....................
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Old 19th Oct 2002, 18:22
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Where accounting is concerned I rather suspect there is no smoke without fire here. 2 profit warnings in as many weeks suggests to me that the gravity of the situation is serious and that a lack of support from the city and the eventual withdrawal of customer confidence, may cause the whole outfit to unravel.

My guess and I hope I'm wrong is that the group will be broken up into pieces. At the end of the day the capacity will be picked up by others who will expand as a result but that will be of little comfort for those working there at the moment who probably cannot believe what is going on around them.
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Old 20th Oct 2002, 07:46
  #27 (permalink)  
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G Khan

Although Air Europe's demise was largely self inflicted, like Laker a very big crook was used to help it over the edge. I just hope the removal of MY Travel products from the shelves of rivals travel agencies will not have the same effect in this present crisis.
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Old 20th Oct 2002, 09:29
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Lunn Poly etc took MYT holidays off their shelves weeks ago over an argument regarding prices. They are now just taking advantage of the situation by putting a spin on their actions.
Cynical on their part but only to be expected.

As most have known for a long time this industry is on a knife edge following September 11. It may well be that we are just the first company to run into problems, more may well follow! The trick will be to pick the survivors, I for one have not written MYT off.

As for loosing customers, yes we will lose some but the financial press asume our customers are as interested in this issue as we are. Most still don't kmow who MYT is. Many of our holidays are still sold under other names and anyway folks have very short memories. It is not that long ago First Choice was widley tipped to disappear, now Peter Long has made them the darlings of the city. A week is a long time in politics and finance.

If MYT goes at least we will be at the head of the job que and at the moment there are enough jobs around to absorb our pilots. The jobs may not be exactly where we want to be but a job is a job. As I said before good luck to everyone in the industry, many of us have been here before, ride it out the good times will return.

Hope for the best and prepare for the worst is the best way to survive this industry!
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Old 20th Oct 2002, 09:41
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Rumour has it (Sunday Times) that 3i are having a look.
Will they be able to persuade Babs to move from SW1 to M14?
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Old 20th Oct 2002, 11:01
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If 3i, or any other group, are becoming involved it surely signals the end. If any rescue takes place and I doubt it very much due to debt commitments, it will be purely for the purposes of asset stripping. The next critical step in the death throes will be the news that the airline is paying cash for fuel. The slippery slope accelerates soon after that.
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Old 20th Oct 2002, 11:12
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So as long as the pilots have jobs to go to, even if they are not what they really want, that's okay then KINSMAN???

I'm sorry, but there is more at stake than you two at the pointy end.........and cabin crew jobs are not a plenty at the moment, not too mention travel agents, overseas reps, admin staff........ the list is endless.

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Old 20th Oct 2002, 11:18
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10bob, your right to disagree of course. However, I made a reference to collusion and perhaps it should not be dismissed.

You are correct in saying that the directors must take responsibility for anything that happens in a company they run. It goes without saying. However, Byrne left the company with 1m handout. What the hell for? If the company was already aware of its problems that is reprehensible, whatever the agreed package was when he joined. Then there is David Jardine, the financial director, the same one who issued two pfrofit warnings within two weeks of each other! Why is he still there? A good question I think.

Well his position must be untenable by now. But his background is interesting. He went to Airtours/MYT from Arthur Andersen in 2000 as finance director but as a partner in Andersens he was involved in Airtours for much longer. A lot of questions to which there may not be forthcoming answers. The connection stinks in my view, and perhaps he might be asked those questions, especially if administrators are appointed. An option which could prove to be the best in the long run.

Now there is talk that the company will be broken up. I can't understand that but everyone in MYT should hope that Peter McHugh, the new chief executive, and Philip Jansen the new chief operating officer, can turn things around pdq. There is plenty of money in the bank and there are plenty of assets - thus making the company far from insolvent. What they have to do is get the confidence of their customers settled and convince the workforce that there is life in MYT.

You can bet that the Venture Vultures are hovering with beaks sharpened to buy any break-up for much less than its real value. They are good at that.

David Crossland has to convince their bankers to keep the 230m facilities in place. Then convince travel peeps that all is well.

Indeed, David Crossland has an enormous responsibility to everyone who works at MYT. That not only will he save the company but all of their jobs too. If he allows a breakup of the company that will be the end. Gone!
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Old 20th Oct 2002, 12:35
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Sunday Times reckons that the non-execs are trying to block byrne getting his hand-out. Apparently it is owed to him due to his original contract.
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Old 20th Oct 2002, 13:29
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Definite case of questionable accounting. Apparently 900 million in off-balance-sheet aircraft leasing liabilities. The people responsible or should I say irresponsible should be thrown in jail. Definite cooking of the books to show a profit, and it must have been going on for some time as well.

As a pilot, I hope that someone moves in and takes MT over quickly so that as many jobs of innocent employees as possible can be saved.

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Old 20th Oct 2002, 16:58
  #35 (permalink)  

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Off balance sheet assets are simply aircraft on operating lease. Aircraft owned or on Financial lease are shown in the company accounts as assets. Operating leases are the same as hiring a car from Hertz.

I'm afraid that one of the hallmarks of the industry at the moment is that there is never enough money to pay the staff a proper salary and always enough to pay the Directors their 1 Year contracted salary and bonus however badly they do; it's called looking after No 1.

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Old 20th Oct 2002, 17:01
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Looking at the airline part of My Travel: The best hope it has are probably the slots that it holds. These may well turn out to be the big difference between the ease with which the competitors managed to push Laker and Air Europe over the edge and the present situation. In those days, the slots couldn't be traded or sold with the airline as an asset.

In a liquidation situation, the aircraft could probably all be re-leased at a far cheaper rate than My Travel are paying and the crews and staff hired at a lower rate than they are at present earning.

For the sake of the My Travel employees, let's hope that the slots make it worth buying the airline as a going concern.

Been there, done that on more than one occasion-so I have every sympathy with those not at director level.
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Old 20th Oct 2002, 17:09
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if the rumoured venture capital 'rescue' price is correct at 750 mio...that would value the shares at around 80p..as against the closing price on friday of around 18p.(having traded as low as 12p)
Shurley shome mishtake?
or maybe fill yer boots!(only for the brave,no widows/orphans etc.)
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Old 20th Oct 2002, 18:26
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Captain Fillosan
Sunday Times states "CROSSLAND: 1M a year but its not his fault. Eh?
"If Crosslands position looks unstable those of Jardine the Finance Director and Eric Sanderson, the Senior non executive, are utterly untenable.
Jardine, who has presided over an accounting fiasco that has the hallmarks of a mini-enron must go"

The articles in the Sunday Times make worrying reading, how can it go wrong in such a short space of time?, and is this what happens when bean counters run the business (Byrne was previously Financial Director).

Above all loss of customer confidence will be the problem, both Holiday Makers bookings and suppliers asking for their money quicker.

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Old 20th Oct 2002, 21:25
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I know what it means, but 900mill liability is 900 mill liability, and that is a lot for a firm that had income of 30mill last year.
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Old 20th Oct 2002, 21:42
  #40 (permalink)  

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Do you mean 30 million profit? Income (turnover) was circa 5 billion.

I still find it hard to believe that a company such as MyTravel can have its fortunes turned around so rapidly. Post 9/11 everyone was saying that MYT was about the safest of the charter operators - no redundancies and a relatively positive outlook. Of course it is becomming apparent that a lot of this was just hot air.

It defies belief that the directors were not aware of what was going on - and now 27,000 employees face an extremely bleak future I'm sure they won't be walking out the door with 2 years salary in the pockets

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