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300,000 hit by collapse of holiday giant XL
Jonathan Prynn and Peter Allen12.09.08
Almost 300,000 holidaymakers have been hit by the biggest ever collapse of a tour operator in Britain.
In a shattering blow for the travel industry, XL Leisure Group called in the administrators in the early hours after rescue talks broke down.
The failure of the country's third biggest tour operator leaves almost 100,000 tourists stranded without f lights, mainly in America, the Caribbean and Mediterranean.
The Civil Aviation Authority and rival airlines were today organising the industry's largest ever "air-lift" to get them home.
As many as 200,000 other customers have now been left with worthless tickets to travel with XL, shirt sponsor of West Ham United.
The company was still taking bookings up to it going into administration at 3am but was forced to ground its airline ahead of the first departures this morning.
Many passengers only found out when they arrived at airport check-in desks. On seeing the closed signs at Gatwick, Bromley teacher Sandy Dennis, 36, burst into tears having saved for her Florida holiday for a year. Those who booked package holidays with XL's four tour operators should get their money back under the industry's bonding protection arrangements, but many others who booked direct with XL Group will lose everything.
The spectacular demise of XL makes it the biggest failure in the history of the UK package industry. ILG went down in 1991 with 23,000 passengers overseas, while Courtline went bust in 1974 leaving nearly 50,000 customers stranded.
A leaflet handed to XL customers told those already on holidays in destinations such as St Kitts and Tobago that they will have to pay for their flights home if they have booked with XL Airways through XL.com or XL call centres.
Alternatively, arrangements will be made for their flights and they will be charged when they return.
Those who booked through other tour operators may be eligible for a flight home. Honeymooner Kelly Belcher, 32, from Southend, who was travelling with husband Mark, said at Gatwick: "The first we knew about it was when we got to the check-in desk and ever since then we've been passed from pillar to post."
Speaking at a press conference today Phil Wyatt, chief executive and controlling shareholder of XL, broke down in tears and said he was "totally devastated".
He said: "It's with great regret we've had to take this decision. We've made every effort to find extra funding. It's a very sad day for me and I am totally devastated, as are my staff, many of whom have been with us for many years. I want to apologise to passengers who had to check in this morning. I genuinely apologise."
He said XL had around 90,000 passengers abroad at the time of the administration. Around 67,000 had booked their holidays through XL operators. Another 23,000 are booked on XL flights through other operators. Mr Wyatt blamed rising fuel prices and shipping company Eimskip, who called in a ¤207 (£165) million debt on Wednesday.
He said: "This company should never have gone belly up, but it has."
Alistair Beveridge, a partner at administrators firm Kroll admitted there would be "significant redundancies" at the 1,700 strong XL firm.
Staff were told of the company's financial situation at a 9.15am meeting following weeks of speculation.
Last year the XL Group carried 2.3 million passengers to 50 destinations. Rival airlines British Airways and Ryanair offered to help bring stranded XL holidaymakers home.
BA chief executive Willie Walsh predicted that another 30 airlines would go out of business in the next three to four months.
Q&A
Can holidaymakers get home if they are on an XL package holiday?
Yes, but they might have to wait. The Civil Aviation Authority is arranging transport home for everyone who booked a holiday package with XL at no cost. They will also make sure hotel accommodation is covered until the flights are in place, which may take a few days because of the vast number of people affected.
What happens now for those who only booked a flight with XL?
The CAA is arranging to fly all XL passengers home but people who only had flights will get billed, and have to cover their own extra accommodation costs. Travellers can try to make their own arrangements if they want to - but they will have to pay.
Those who booked on a credit card will get a refund, depending on the credit card company's exact terms and conditions. But those who paid on a debit card will get nothing.
Is travel insurance any use?
Very unlikely. The Association of British Insurers says very few travel policies cover the collapse of the airline or holiday operator.
What if I have booked a holiday or a flight?
Your holiday is cancelled and you should speak to your travel agent about a refund. If you booked a flight you are not entitled to a refund and should pursue your credit card company. If you used a debit card, you have lost the flight and the money.
Reader views (20)
As an XL sufferer Having just returned home on an non ATOL protected flight chartered by Monarch as sympathetic as Phil Wyatt, the XL chief executive seemed- he really ought to be brought to task to explain why the company considered it right and proper to continue trading knowing that 1000's of its customers were on the verge of being let down and stranded abroad - practices like this sicken me
- E.C.C., Prescot
Reply to Gill Zurich,
The reason why I said what I said was that the Government should draw up a code of practice that when a company is failing a line in the sand must be drawn. I understand that X.L. was in financial difficulty before the end of 2007 but yet allowed to carry on trading because they kept it to themselfs hoping it would go away until the bubble burst, this cannot be right can it?
This Company was taking bookings right up to midnight before the bubble popped, and many others are doing the same?.
Who will be next? and Joe Public and jobs will be lossed and shares to and the company bosses as I said walk off into the sunset as if nothing has happend.... still wealthy?.
- J.L., Scarborough. N. Yks.
Allen are you really that thick?
- Brian, wiltshire
Perhaps Allen from London should check his facts : Travel Insurance seldom covers the failure of an airline. His absurd comments criticising "working class people" travelling abroad reflects the typical outlook from one living in the rich end of a council estate. Possibly a West Ham supporter, ashamed of the XL ad on his football strip.
- John Bursby, Royal Tunbridge Wells
This is just the beginning. Many budget airlines are going to go the same way with only the major players surviving. Could this mean less air rage incidents as your typical lager swilling, trouble making Brit, (and lets me honest, the majority of air rage incidents involve some member of the British public who can't control their level of alcohol consumption) won't be able to afford ticket prices set by more established airlines? I personally have never been a fan of budget airlines but I feel for all of XL's employees.
- Kokopelli, Nottingham, UK
Its very sad but this is what happens when people are led to believe that expensive holidays can be had at discounted prices. The airlines and holiday companies are at fault not the government, they sold flights and holidays and prices that didn't cover their costs and you can only do that for so long before running out of cash. Simple economics.
Hopefully people will realise that paying the 3% surgcharge, although a pain, would have given them some protection. I can't understand people who don't insure themselves. If you can pay £1000 for a holiday then you should be able to afford £30 for insurance.
I feel more sorry for the staff who have lost their jobs.
- Luke M., Sydney, Australia
Surely the management could have hedged their fuel purchases if they had wanted to. It looks like they decided to gamble with their customers' money and lost spectacularly ... save that it's the customers, not the management that are the losers.
- Tonyb, Twickenham
Being the sister of someone who is currently stranded in Sharm-el-sheikh, Egypt due to the collapse of xl airways, having booked through an appropriate tour operator AND having invested in travel insurance, despite coming from a working class background, I find your comment extremely offensive (Allen, London, UK). Not to mention the fact that, as illustrated, most insurance companies don't cover an airline collapse, so insurance is neither here nor there. The working class have as much right to travel as any other social class. It's hardly the fault of the working class that XL Airways have been unable to keep an appropriate check on their finances!!
- Roz, North Lincolnshire, UK
Allen of London, I think you should read the small print of any travel insurance that you may have. It is most unlikely that it covers for the travel company going bust.
- Peter, Esher
Alan what a mindless comment to make. These people (and they are the backbone of this country) save very hard to take their children and family on holiday abroad. Who are you to make such disparaging comments. The sad thing about what you say is that even if you do have travel insurance you are not covered if you have booked a flight only. Also if you pay with your debit card and not credit card you lose out that way too.
- Jan, MK
why huge fuel charges avgas costs 34pence a litre
- John Rooney, lincoln
All very sad etc etc... but... can someone explain why there are so many pictures of kids that are stranded abroad? I thought they were supposed to be at school?
- Nobby Clark, Perth, Scotland
Allen, in this instance the holiday would not be covered by travel insurance so your point is redundant.
- Bob, Cheam
John from Scarborough and John from London - what are you talking about?! You can hardly blaim the government for this and 300,000 people is hardly the whole nation.
- Gill, Zurich, Switerland
Whilst very sad I do not see how this is the government's fault. The company knew about the cost of fuel and either should have financed the increased costs themselves or gone back to the customers and levied a fuel surcharge - most people would have paid it if they had known the alternative was no holiday/being stranded. this is poor management by a travel company NOT (for once) the fault of politicians.
- Andy, London
This is what happens when the working class are allowed to think they can afford to travel abroad. If they were intelligent enough to book with a proper company or pay for travel insurance they wouldn't have this problem, but instead they think insurance is for fools as we saw with the floods last week.
- Allen, London, UK
Will a reader please explain to me the difference between me taking something from a shop and deliberately leaving without paying? And companies who take a customers cash knowing full well they cannot and will not supply the goods or services paid for, in my view both are theft and should be treated as such.
- Colin, Bristol
John L of Scarborough, so sorry to hear your awful story. But we need to get rid of those in power and replace them with new, uncorrupted teams. The mainstream political parties will do nothing. The country is awash with arrogant, greedy and corrupt politicians, bureaucrats and businessmen. For most of these, and so many others, all sense of public duty, civic pride, honour has long ago been washed away.
- Helen, norwich
Again, new labour should be hold accountable for this spectacular failure, bringing the entire nation into chaos and utter misery.
- John, London, UK
Good day London,
Yet again dreams shattered, jobs lost,and a firm taking bookings to travel up to midnight last night, my view a disgrace?
The company new weeks ago that its cash flow was in difficulty and should of taken steps to do something about it and like many firms whether it be travel or industrial they just bury there heads in the sand and hope the problem goes away....then BANG it hits the fan.
I don't feel sorry for the company bosses but I do feel for those who are employed by the company and of course to the thousands of travelling public who invest in a ticket to ride only to find they are stuck both ways and to be frank its not good enough and laws should be inplace that targets company bosses that should strip them of there finances when things go belly up.
Just five years ago the company I worked for went bust but the top table of the company ring fenced themselfs and the administrators could not do anything about it and also the company had strip us not only of a job but our pensions to, and the suppliers to the company lost thousands due to unpaid bills, the top table of management rode off into the sunset ....laughing all the way to the bank.
Finally, I say wake up you lot in power and do something your just like the rest you bury your head in the sand .... New Labour the lables dropped off?.
- John L., Scarborough. North Yorkshire.U.K.
