XL problems for British travellers

The collapse of XL Leisure will leave thousands stranded - and they can't even walk back through the Tunnel...

Last Updated: 31 Aug 2010

XL Leisure, Britain’s third largest tour operator, filed for administration this morning, grounding all 21 of its planes and leaving 70,000 people stranded at more than 50 resorts around the world. And just to really add to our transport woes, a fire in a freight train in the Channel Tunnel has forced Eurostar to cancel its services for today, leaving another load of Brits camped out on the platform at Gare du Nord. Summer holidays are rapidly becoming more trouble than they’re worth…

The collapse of XL may not have been as sudden as it appears. Rumours have been circulating for a while that the tour operator has been trying to refinance its £200m debts, after previous backer Barclays got cold feet. The group, whose brands include Travel City Direct, The Really Great Holiday Company and Kosmar Holidays, as well as airline XL Airways, carries 2.3m passengers a year and employs over 1,700 people. But like many in the industry, it’s clearly been unable to weather the double whammy of rising costs and slowing demand.

The result is that, as of the early hours of this morning, over 60,000 people suddenly find themselves without a plane ride home, while another 200,000 will see their holidays cancelled before they’ve even begun. Those who bought their break as a package will be entitled to an insurance pay-out from the Air Travel Organisers’ Licensing scheme, but those who booked directly through XL won’t be so lucky (unless they paid by credit card). And even if people are covered, they’re likely to be hanging round airports for days while alternative flights are sourced.

Chairman Phil Wyatt said this morning that he was ‘totally devastated’ by XL’s failure, and criticised the authorities for not letting them bring back all their stranded passengers – though given that they presumably couldn’t pay for the privilege, this seems a bit rich. Rival operators are already leaping into the breach: bmi has already issued a release saying that it has sent a plane to Minorca to ‘repatriate stranded holidaymakers’ and ‘made a service back-up aircraft and crews available to the CAA on a round the clock basis to assist with rescue flights’ (at a price, presumably).

But although this might be good news for XL rivals (airlines and tour operators), there will be some big corporate losers. The Evening Standard reports that Icelandic financier Bjorgolfur Gudmundsson (best known in the UK as the owner of West Ham FC, but also a major shareholder in XL associate Eimskip) will take a big hit, as will Barclays. Then there’s West Ham itself, which has seen its £2.5m-a-year XL shirt sponsorship deal disappear in a puff of smoke (and it’s highly unlikely they’ll ever find a more apt sponsor for big-boned striker Dean Ashton). So it’s an XL headache for all concerned.

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