Firm's collapse strands thousands

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XL Leisure Group announced it was grounding all flights after going into administration having failed to secure a rescue package.

The group, which had still been taking bookings until recently, said it had been hit by rising fuel costs and the credit crunch. The Civil Aviation Authority and other travel companies launched a major operation to help holidaymakers stranded by the collapse.

XL Leisure Group chief executive Phil Wyatt said he was "devastated" at the holiday company's collapse. He added that he believed his firm should not have been forced to go into administration.

He told a press conference it would be a "huge challenge" to bring home the 67,000 people currently overseas on holidays organised by XL.

Administrators Kroll said customers who booked packages with the group's tour operators were protected by the CAA's ATOL scheme. But people who booked flights with XL Airways were not covered.

Kroll said: "Customers who bought a flight from XL Airways are not protected, however we understand that the CAA will endeavour to offer these customers flights, but there will be a fee to cover the cost."

Scores of disappointed XL customers queued at the firm's main airport Gatwick, one of the busiest days of the week for holiday flights. Many had no idea what had happened until they were told by airport officials.

Transport Secretary Ruth Kelly said everything possible was being done to get stranded holidaymakers home.

She said "The industry has reacted well to this collapse of a major tour company and are assisting the CAA with the recovery plans to ensure that affected passengers are repatriated as soon as possible."