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Mytravel in the S$%t
From the BBC website
More than £300m ($466m) was wiped off the market value of MyTravel after the UK holiday company admitted there were problems with its accounts. The company, formerly known as Airtours, is best known on the High Street for its Going Places chain of travel agents. It warned investors that its profits could be £50m lower because of the accounting problems and a drop in sales. I have... instigated a comprehensive review of our commercial activities and financial processes David Crossland, chairman The news sent the company's shares tumbling 82% to 13 pence, although by early afternoon they had crawled back to 25p. It was the second time in two weeks that the firm had said its profits would fall below expectations. After the last warning the chief executive Tim Byrne resigned. MyTravel said that since that last trading update, on 30 September, "a number of additional matters have come to light". Acounting hole MyTravel said profits would be £12m lower than expected because trading in the UK at the end of this summer had been worse than anticipated. And a further £8m would be wiped off profits because of a hole in the accounts. MyTravel Group MyTravel package holidays Late Escapes holiday business Going Places travel agents MyTravel and MyTravel Lite airlines North European and US travel businesses As well as those amounts, the company said it might have to make revisions to accounting estimates. Those revisions could take £15m-30m off profits. The move comes days after corporate troubleshooter David James warned, in an exclusive interview with BBC News Online, that accounting errors were set to prompt a spate of "major crises" in UK firms. In-house review MyTravel chairman and founder David Crossland saw his 10% shareholding in the company fall on Thursday morning to about £6m from almost £40m the evening before. He said he had instigated a detailed review of the group's commercial activities and financial processes. MyTravel has appointed the head of its North American operation, Peter McHugh, as the new chief executive. |
This would be the same David James that troubleshot Dan-Air and then saw them sold for a pound and still considered it a success is it? A success because he and his team AND the banks all got their share before selling the company down the river. How somebody as good as him could miss that wacking great tax credit still beggars belief.
Tell him to keep his damned nose out of my company. |
don't worry lurkio
......quote taken out of context, from another article, broadcast before the "hole" at MyTravel was discovered.
Nothing printed appears to connect DJ with MyTravel. |
I wonder how many other UK Holiday companies will be revising their profit forecasts downwards. Surely it can't only be My Travel which is experiencing difficult trading conditions.
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newswatcher,
thanks for that, it is the most reassuring thing I've heard today. Just seeing his name again brought a shiver to my spine. |
City analysts (on the BBC) saying the company is still very sound which I don't doubt for one minute.........boy those shares were good value at 15p a piece eh Tailscrape?
PP |
Get real folks - Byrne gone, chief pilot gone, several profit warnings, withdrawal of dividend. This lot need a lot of luck and eventually a big wreath. RIP !
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Sad day if DJ got involved.
Dan Air was a fiasco as all will remeber. |
Financial press report reads 'My Travel is likely to have to sell off one of its crown jewels, possibly the My Travel Airways charter airline with its fleet of more than 30 planes'. If this should transpire remember tupe.
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What will cause MY Travel's demise, IF it is going to happen, is two things. Passengers changing travel arrangements for next summer - worrying about MY still being able to "deliver." That will hit profits yet again, and will break a few straws on the way.
And the announced whopping "black hole" of £50m that Arthur Andersen's dodgy accounting practices have created, and spotted by Deloittes. No way back from that. It will break them if the shares don't lift above the pittance they are now. Know colleagues who have/had shares that were worth a bomb, now they are worth virtually bu@@er all! And, don't forget the pension fund, that will be a source of interesting specualtion in the next few days. Better hope that David James doesn't get involved. But if he is employed by a bank or an administrator he knows his first job is to secure HIS substantial fee and what is owed to the employer who put him there. He even knows how to avoid letting Customs and Inland Revenue get in first - now that IS clever. He is ruthless, and that is being nice! The airline industry has in many ways created it's own dilemma by it's incestuous growth, problem is then all about gearing the debts that follow. If I were a small airline now I would be making lots of noisy promises about next summer's traffic uptake. Sorry FD drivers but you are going to have to sweat for a while, and the smell ain't gonna be none too sweet. But I do wish you well. |
city analysis - 18/10
In the "financial press" this morning(18/10) news is that the company, now worth just £140m, is "viable" until next March, when current banking arrangements need to be renewed.
Doubts were expressed about their ability to redeem a £220m convertible bond, due in March 2004. This forms part of the group's regulatory capital, necessary under Civil Aviation Authority rules for a licence to fly holidaymakers, and secured by "assets which are readily recoverable"! However, it will almost certainly require some asset sales from MyTravel. Top of the list are Cresta and Leger, both of which may be subject to a management buy-out, and also TSI, the American Travel Agency bought in 2000 for £240m. Other suggestions include £100m from the sale of their freehold hotels. Apparently, yesterday LunnPoly(TUI) took MyTravel brochures off their shelves, due to the uncertainty. Mind you, it is some time since I saw a MyTravel brochure in Lunn Poly anyway! |
And, don't forget the pension fund, that will be a source of interesting specualtion in the next few days. |
And the announced whopping "black hole" of £50m that Arthur Andersen's dodgy accounting practices have created, and spotted by Deloittes. The "black hole" is the creation of the directors. Period. They are the ones who are responsible for the accounts and sign them off as "true and fair". The fault primarily rests with them. |
More than a touch naive if I may say so 10bob
The fact is that the downturn in business was not reported a fortnight ago and was forced by Deloitte's. This was as a result of Andersen's 'potential revision's.' What the directors sign for is that which they and the auditors agree to. It was in fact a method adopted by Andersen's in favour of Enron. The directors, therefore, were left with no alternative than to resign. A signature is laid on the company's accounts as a direct result of those which their auditors give them. Collusion might be a word to use, but who can tell? The dirtectors might yet feel the wrath of law. MY travel have to rely on credit from their bankers, Barclay's and Royal Bank of Scotland, for a renewal of £250m of those credit facilities. That has been shelved for the moment to see where the airline goes. Don't ever misunderstand the power of the banks! However, tour operators are withdrawing their business already. When the confidence in their ability to produce the profits they forecast takes a dive so does the airline. Hard facts but nonetheless facts. It is a tough and ruthless business. |
What will finish Mytravel is a lot of speculation that they are about to go bust. It won't matter that they are making money or that they have assets! A lot of speculation in the press and uninformed information circulating can do a hell of a lot of damage.
The likes of Lunn Poly are taking action to try and ensure the end of one of their main rivals. As for the total C#$$ regarding the pension fund, give me a break where does this information come from. If these informed city insiders are so good at predicting the future of a company why are pensions, endowments etc in such a poor state? The only folks stealing from the Mytravel pension fund are the brokers who have lost a small fortune for us this year, the so called city insiders. These guys have no more idea of what is going to happen next than anyone else. They probably get their hot poop from CNN the BBC or this forum like the rest of us!!!!!!!!!!!!!!!!!!! Guys this is a rumour network but we all owe it to each other to be responsible. False rumour and idle speculation costs jobs. It may be yours next, or mine! There is a storm coming in our industry and it's name is George Bush! Good luck to us all. |
Spot on Kinsman. I used to work up there and thats exactly how it works! The only thing the city boys are interested in is how they can make there buck, regardless of how it affects companys or ther employees!!! :confused:
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Back you up 110% kinsman. The jets are all FULL with pax. I hope that this is the end to bad news but the media seem determined to destroy the company. Crossland & Co need to come out on Monday AM with the gloves off. MYT will still make a PROFIT. Most of the carriers on the Ocean last night are losing money hand over fist. Hard times, but the company will prevail.:cool:
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So when exactly did Crossland "buy ILG's defunct airline"?
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763 Jock,
The jets may be "FULL", but that doesn't mean to say those seats/holidays were sold at a profit. IT companies will sell the last seats/holidays at a loss just to recoup some of the money they have already spent on the products. Better to sell a 500.00 holiday for 100.00 than not sell it at all. |
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) |
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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IcePack
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 |
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! |
FLS line maint will prob finish off 'Y' Travel....................
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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. |
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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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!;) |
Rumour has it (Sunday Times) that 3i are having a look.
Will they be able to persuade Babs to move from SW1 to M14?:p |
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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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. :mad: :mad: |
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! |
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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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. http://www.observer.co.uk/business/s...815231,00.html |
Airrage.
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. :( |
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. |
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.) ;) |
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. :mad: :mad: :mad: |
sky9,
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. |
Airrage,
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 :mad: I'm sure they won't be walking out the door with 2 years salary in the pockets :mad: :mad: :mad: :mad: A4 |
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