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BRITAIN’s third-largest holiday company, XL Leisure Group, is in urgent talks with its banks after plans for a refinancing hit delays.
The group’s lenders, Barclays and the Icelandic group Straumur, are understood to be considering their options this weekend. Airline-industry sources said that Barclays had recruited Kroll, the corporate-restructuring specialist, to advise. The sources said the future of the group could be decided this week.
The company is understood to be looking for a new lender after Barclays pulled financing associated with fuel-hedging positions on August 14.
XL, which underwent a management buyout in 2006, has grown quickly to become a big player in the UK holiday market behind the two dominant firms Tui Travel and Thomas Cook. XL Air-ways, its airline, flies to more than 50 destinations. It sells holidays under a diverse range of brands including Kosmar, XL.com, Freedom Flights and Travel City Direct.
A company spokesman confirmed yesterday that “third parties” had been engaged as part of its planned refinancing. “We have no further comment on the specifics of the refinancing. While acknowledging it is a challenging market, the XL Leisure Group is experiencing strong trading, with bookings for 2009 already outperforming last year.”
Surging oil prices and shaky customer demand have made it a tough year for airlines. Last week Zoom, a low-cost transatlantic airline founded by Scottish entrepreneurs Hugh and John Boyle, said it would go into administration, stranding passengers. Industry sources said the company had been in discussions to receive funding from a consortium of investors.
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Chris Bainbridge - do you feel a bit foolish this morning!!
Dave, London,
Why Mr Blake should the Government bail out XL? A loss of 26m on turnover of 550m is nothing to do with the current economic crisis - though difficult - and everything to do with not charging correct prices for the services offered. I'm sorry XL are gone but with bad management it's no surprise
Yvonne, San Diego, USA
XL will not go down the drain. The media is just making mountains out of molehills, simply because of Zoom's recent demise. I'm sure there are many other large British companies that go through refinancing processes on a regular basis, yet we never hear about it. XL has a long future, I'm sure of it
Chris Bainbridge, Crawley, UK
I had booked with XL to go to Tobago in November - I found out from relatives in Tobago that XL were cancelling flights in November. I called XL who confirmed . They say refunds will take up to 10 working days - Will I see my money - £1700.00?
James Spriggs, Bournemout, UK
I've booked a holiday in Florida through Travelcity direct for December and am due to make the final payment in 2 weeks time so I hope we know what is happening by then.
Anne Rayne, Leigh, Lancs
I am going on holiday on 08/09/08 with freedom flights, will i still be able to go on holiday or does it look like its going to be cancelled?
Sarah, wakefield,
It's the usual story with the Banks - fair weather friends when all is hunky dory and close ranks when the going gets tough.
However, I think that X-L will be able to survive this blip.
And I agree with Mr Blake, the less players in the travel industry will mean more expensive flights and holidays
Linda, Canterbury, UK
As a retired bank manager it is ridiculous that banks are all too willing to pull the plug. Surely if the company's position does not deteriorate even if it technically breaches some of its covenants banks should support the company. The alternative is a fire sale in which the bank could lose more.
ian , Maidstone,
Ah well. It's back down to earth for those who thought they could just nip over to Barbados for yet another jaunt.
Go Butlins...
Jim, London,
It has been known for now a little while, that XL Airways had difficulties.
Last week on august 26th, they announced several service cancellations for winter 2008 with no plan to re-introduce those flights.
Cancelled flight are St Kitts, Antigua, Grenada, Barbados, St Lucia, Trinidad and Tobago!!!
G de Montpellier, London, United Kingdom
why isnt this government helping these companys through hard times,i know these make money but if these companys go under its the british public that suffer as well as the holidaymakers
mr r blake, bradford, west yorkshire
Oh well, another one down the drain.
harry hartley, reading, uk