'More airlines at risk' as XL's collapse strands thousands

A FURTHER 30 airlines could go bust in the next three months, the chief executive of British Airways warned last night, after the collapse of XL Leisure Group.

Willie Walsh said there were many other "weak" airlines worldwide that he expected would suffer the same fate as Britain's third largest tour operator.

More than 65,000 holidaymakers were left stranded by the collapse of XL Leisure yesterday. Hundreds of people arrived at UK airports to find their flights had been cancelled after the group went into administration, blaming volatile fuel prices and the economic downturn.

Tens of thousands of people on foreign breaks were left wondering how they would get home.

About 200,000 customers with advance bookings with XL have had their flights cancelled.

All XL flights from Glasgow Airport have been cancelled, including those to Alicante and Palma today and Larnaca tomorrow.

Another airline, Freebird, stepped in to take on a flight due to leave at 5pm from Glasgow yesterday evening.

The Civil Aviation Authority was last night struggling to find ways to bring back travellers to the UK.

Meanwhile, the XL's 1,700 staff worldwide were facing an uncertain future.

Its chief executive, Phil Wyatt, said he was "devastated" at the company's collapse and apologised to his customers and employees.

Mr Walsh said: "We have seen 30 worldwide go. I would be very surprised if it is not something similar to that in the next three or four months."

He added: "This is a difficult trading environment and some of the airlines that we have become used to will not survive."

Kroll, the firm brought in as administrators for XL, said most people who booked holidays with it should get a refund.

Those who paid by credit card, Visa debit card or as part of a package holiday should get their money back. Those who bought their holidays through a travel agent affiliated to the Air Travel Organisers' Licensing (Atol) scheme should also get refunds. However, anyone else will not.

Stuart Mackellar, a partner at Kroll appointed as joint administrator of XL,

said: "We are not thinking about liquidation at the moment. We are thinking about a rescue plan for the survival of parts of the business."

In the past 12 years, since XL started flying out of Glasgow, it has transported 795,000 passengers, 100,000 in the past year alone.

XL's demise is the latest blow to the British travel industry and follows the collapse of budget airline Zoom last month. Zoom blamed a jump in fuel bills.

On Wednesday another tour operator, Seguro Travel, which operated out of Glasgow Prestwick Airport, went into administration.

Earlier this week Spanish charter airline Futura International did the same.

However, TUI Travel and Thomas Cook, two holiday giants, experienced strong gains yesterday as a result of the collapse of competitor XL, with shares in both up more than 6 per cent.

XL said in a statement on its website: "The companies entered into administration, having suffered as a result of volatile fuel prices, the economic downturn, and were unable to obtain further funding.

"The joint administrators cannot continue trading the business and therefore all flights operated by the companies have been immediately cancelled and the aircraft grounded."

'Fizzing' passengers still try to escape

PASSENGERS due to fly out of Glasgow Airport on XL yesterday morning spoke of their disgust and disappointment as flights were cancelled.

Hundreds of holidaymakers had expected to get in or out of the airport shortly after the airline collapsed, leaving many scrambling to book alternative flights.

Steve Barker, 52, and wife Beatrice arrived at 4:40am to catch a 7am flight to Tenerife, having taken a taxi from Dundee for £140.

He said: "Within a minute of leaving the taxi and walking through the doors we were handed a piece of paper explaining what had happened.

"There were no conversations. The girl on the desk said that would explain it all."

The couple stood in a queue at the Barrhead Travel office for four hours to try to rearrange flights to spend two weeks in a timeshare apartment.

Mr Barker, 52, said the holiday cost more than £2,000, not including the expense of booking new flights.

"These companies say that the credit crunch and rising fuel prices are to blame," he said. "I disagree with that because people have paid the extra money for the fuel. I think the credit crunch name is being used too much and it's an easy get-out."

Gillian McNish, 20, arrived at the airport around 2:30am from Dumfries with three friends for a week's holiday in Tenerife. They managed to book new flights at considerable extra cost through Thomas Cook and Flyglobespan. "It's just awful, but what could they do? There are just no planes," the business information officer said.

Ron Sangster, his mother Jean, and his girlfriend Morag Taylor had to pay more than £600 each to book new flights to Tenerife. But the group will not be able to fly out to their villa until Tuesday, and will have to fly from Leeds/Bradford airport.

Colin Templeton, from Irvine, said his family had paid £1,200 for their flights with XL direct on their website, meaning they were unlikely to get any money back. They paid an extra £1,600 to buy more flights for all five of them to go ahead with their holiday.

Mr Templeton, 33, said: "XL phoned my dad just last week and confirmed the flight and asked if we wanted priority booking, for which he paid £10 each so we could sit together. So that is another £50 which we won't see again."

His father, Ian, 61, added: "I am fizzing. This has cost us a lot of money." He added that they were hoping the experience would not spoil the rest of their holiday.

Lyndsay Moss

500,000 fewer passengers to leave major airports as industry flies into severe financial turbulence

AVIATION has always been a cyclical business and one of the key reasons is over-capacity within the industry.

In the early 1990s, Air Europe went to the wall and before that there was Laker Airways in the 1980s and Courtline in the 1960s.

The airline business is, in part, driven by the sale of ever larger aircraft, which on the one hand have better seat-to-mile costs but on the other have a hefty price tag, exacerbated when we get a fuel price hike.

At the moment, we have pressures with fuel prices and the drop in passenger numbers because of the credit situation.

A company like XL is vertically integrated, with its own tour operators as well as its own aircraft.

This is great when things are going well but not when they are tight. In a declining market, they are often worse hit than those that don't own their own aircraft and tour operators.

There has been a move away from the traditional tour operators who sell package holidays because of the likes of Ryanair and easyJet. These budget airlines are much less vulnerable – but they are still among a large group of airlines chasing a declining market.

The credit situation started to bite in April and that will have really hit the winter market. I expect that winter bookings are not looking too healthy.

This is also the first year in a long time that there could be fewer people flying out of Glasgow and Edinburgh than last year. Overall in the UK, passenger numbers are down by 1.7 per cent.

For Scotland's two main airports, the results are much worse. It looks like the number of passengers using both airports this year will decline by between 450,000 and 500,000.

As consumer buying power continues to get squeezed, this trend could get significantly worse.

I don't think the likes of easyJet and Ryanair are going to go to the wall and in fact they might benefit from the situation with XL as it leaves one fewer operator in the market. However, Ryanair's and easyJet's share prices are both down compared to last year.

I think UK airlines will generally survive but we might see some foreign airlines go.

I can't remember another time when we have had three operators disappearing so close together, and you can easily see some others struggling.

I think we are in for tough times ahead.

Some of the small operators could struggle, such as those flying to Polish cities. The Polish market isn't what it was a year ago.

• Richard Havers is a former senior executive with Continental Airlines and British Caledonian.

Tears and anger as tourists expecting dream trip wake up to cancellations

AS BLEARY-EYED holidaymakers eagerly arrived at Glasgow airport full of excitement about their trips to the Tenerife sunshine, their high spirits were dashed.

With some having booked their holidays with XL Leisure Group months in advance, they turned up at the airport in the small hours yesterday for their 7am flight.

However, it was only when they walked through the door that they were handed pieces of paper breaking the news their holidays were cancelled.

Tears, anger and frustration followed, as well as a scramble for replacement flights.

Today, hundreds more people faced the prospect of cancelled holidays, with flights from Glasgow to Alicante and Palma grounded, and XL in administration.

Helen Wiseman was among the disappointed holidaymakers disgusted to discover at such late notice that XL had gone bust.

The tour operator was still taking bookings on Thursday night, but shortly before 3am yesterday, it was announced that administrators had been called in.

Ms Wiseman only found out when she turned up at Glasgow airport with her daughter at 4am yesterday. "It is disgraceful," she said.

"This company was taking money from people right up to the point where they went bust."

She had to spend £800 to rebook flights for herself and her daughter with Thomas Cook, on top of £560 they had already paid to XL.

She said: "There were some young lassies on the flight, and one of them was crying. There are some people who don't have the money to go and book something else."

Ms Wiseman added: "Obviously, we have heard that there have been some airlines gone bust, but you never think it will happen to you."

She hoped to be reimbursed for the cancelled flights, but others will not be so fortunate, depending on how they booked their holidays.

The scene in Glasgow was mirrored across the UK and other countries, with about 85,000 people estimated to be stranded.

There were reports of pilots finding out in the air they no longer had jobs.

In Orlando, passengers were sitting on a XL plane that had already left the gate, when they were told to disembark. About 100 British people spent the night in the airport.

A spokesman for Air Traffic Organisers' Licensing (Atol) defended the decision to allow the company to continue trading until it went bust.

He said firms should be given a chance to find a "white knight" investor to save them.

"It's right that a company is given every opportunity to continue to trade," he said.

"Clearly, we got to a point where the game was up and the company wasn't able to operate and had to close."

Meanwhile, XL's chief executive, Phil Wyatt, apologised and said the management team had "worked night and day" to try to refinance the company.

He said the company had debts of £143 million, but insisted it did not have to fail.

Mr Wyatt said XL's aircraft were sitting on runways around the UK ready to bring the holidaymakers home, but were not allowed to take off.

He warned that the Civil Aviation Authority had a "huge challenge" on its hands to bring back the tens of thousands of people overseas on XL holidays.

"It's going to be the most challenging airlift, I believe, that anyone has undertaken," he said.

Tom Penman, 42, a youth education manager from Douglas in Lanarkshire, was among the frustrated holidaymakers left stranded.

His family missed out on a holiday in 2007 so that they could go on a dream trip to Florida this year.

"It's shocking. We've saved up for two years and now the children are in tears," said Mr Penman.

He added: "We bought all the theme park tickets already and it was meant to be a holiday of a lifetime.

"I'm annoyed that some people knew about this yesterday and lots of passengers were re-booked before this morning. I couldn't believe it when I found out."

Among the other victims of the holiday firm's collapse were Maggi and Nick Bradgate, who were robbed at gunpoint on a safari holiday in Namibia earlier this year.

They turned up to Gatwick airport, XL's main base, to start their two-week holiday on the Greek island of Naxos.

Mrs Bradgate, a gardener from Crowborough, East Sussex, said: "After our traumatic experience in February, all we wanted to do was to get away for two weeks in the sun.

"But after what happened to us before, all I can do is laugh. At least we're alive."

Transport analyst Gert Zonneveld said the massive rise in the cost of aviation fuel had proved decisive in the closure of many airlines.

He said: "We all know that the cost of fuel is one of the main problems faced by the airline industry."

Mr Zonneveld warned that more airlines could struggle in the coming months. He said: "I think we will see more airlines going under; we may also see more tour operators going under."

Mr Zonneveld said the current problems facing the airline industry were the worst he could remember.

Jenny Haworth

Other travel firms which fell victim to credit crunch

UK firm Seguro Travel collapsed just three days ago. The travel firm said it been forced out of business by the earlier demise of charter airline Futura, which operated 80 per cent of its flights. The Cheshire-based company had taken about 18,000 bookings for future trips when it went into administration on Wednesday.

About 2,500 customers were stranded in Spain and Portugal.

It operated flights from Prestwick to Girona, Alicante, Lanzarote, Las Palmas, Palma and Tenerife in Spain, and Faro in Portugal.