Landsbanki irony as rivals’ shares soar

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"We reiterate our buy recommendations on TUI Travel and Thomas Cook following the news about XL," said London-based analysts of Landsbanki — the Icelandic bank that appears to be XL's biggest creditor, and central in the plug being pulled on the company.

Their analysis was, however, being echoed by others who rushed to buy the stocks, with TUI up 13 ¼p at 235p and Thomas Cook 16 ¼p better at 2511/4p.

"While [XL's failure] highlights the obvious challenges from a slowing consumer and rising fuel costs facing the industry, crucially it is likely to result in a further material cut in industry capacity," said the Landsbanki scribblers.

"It is our central proposition that supply will fall by more than industry demand, and that the two giants will prosper while smaller operators go bust or materially cut back capacity as they lack the necessary critical mass.

"XL, as well as providing tour operating packages themselves, also provide flights for other operators.

"As such, this could see a domino effect on other smaller operators thereby reinforcing the supply cuts."

Analysts at both Dresdner and Investec said that the failure of XL will ultimately be good for the industry.