The XL Leisure Group went into Administration today
(12th September 2008) and the joint administrators decided that immediate cessation of all trading was the only option.
The failure of the United Kingdoms third largest travel group has an immediate effect on customers, staff, companies supplying services to the group (which in turn may affect the staff in these companies) and investors, whether shareholders, or banks and because of the range of XLLG activities these effect will extend globally.
Before background to this failure I think it necessary to list the companies which form XL Leisure Group many of which do not have XL as part of there trading Name and at the same time provide links to useful information to XLLG Customers:
XL Leisure Group - Companies and Holdings
First I will cover companies in the group which should provide British customer protection under the CAA run ATOL Scheme:
The XL Leisure Group also own the following companies offering services to British Customers:
The XL Leisure Group also have Airline Subsidairies in France, Germany and Ireland: Neither the French nor German Airlines have been affected by the Parents failure and continue to trade normally (sources CAA and XL Web Site), but the Irish Airline appeared moribund even before the collaspe:
The Commercial Arms of XL Leisure Group:
Impact on those who have to deal with the Immediate Aftermath
Whilst the media obviously concentrate on the impact on Customers they never consider the efforts of the failed groups employees and agencies staff who have to deal with the immediate and ongoing aftermath of the failure.
British Travel Group and AIrline failures always seem to be decided in the small hours of the morning (Court Line, Laker Airways, International Leisure Group, spring to mind). This means the first non-executive staff who are aware of the situation are the Night Shift Operations and Crewing Staff.
Whilst being now aware they probably soon won't have a job in the near future, they have to get on with the task of getting a sitrep out to all their Customer Representatives at destinations around the world and to crews Nightstopping overseas, in most cases this will have to be initiated by a Phone Call which will slow things down.
As this progresses they will have to commence the notification of Ground Handling Agencies around the Route Network to brace themselves for what is to come (bearing in mind these Ground Handling Agencies will also be owed money).
The CAA will also be among the first notified and they will have to start the work of planning and implementing the rescue of ATOL covered passengers, plus building it Web Site Advisory Notices etc, other parties such as ABTA will also have to be advised and by this time the Media will be 'on the case'.
Bad News travels fast and soon the Operations and Crewing Centres will be bolstered by PR and Enquiries Staff. By the time the first Passengers start to arrive at European Destination Check-in, most Sections in the affected Airline and Travel Companies will be manned, whether these are customer contact, or not.
Whilst these sections workload will dramatically increase as the day wears on at least they are spared directly facing the Passengers.
Even when pre-warned the Ground Handling Agencies will not have much time to call-in extra staff and initially at least they and the Company Representatives will be overwhelmed, especially as the rest of the Ground Handling Agencies Operations have to continue normally.
The situation will get worse if there are a lot of affected flights through the Airport and each flight has Passengers some of whom are protected under ATOL and some who aren't. With the assistance of the Airport Authority it may be possible to at least move these passengers to a special area of the terminal building. But it is very unlikely that the Company Representatives will have sufficient local funds to provide even Light Refreshments.
Representative at the Hotels where customers are staying will now also be in the 'firing line' and with even less direct support than their colleagues at the Airports.
Whilst the first day is always the worst day in reality, for the company and agency staffs it is usually the second day that seems the worst because although the rescue of the stranded has started, those not covered by the ATOL Scheme will becoming more desperate, and although the general situation will improved at the individual level, the customers will be even more frustrated and angry and the staff attempting to deal with the situation will now be overtired.
By now writs and impounding of assets by Agencies and Airport Operators probably will have started and even as the stranded passengers , crews, station engineers if expatriates and later as the Hotels clear, the Hotel Representatives are repatriated the work for the Airport Based staff changes, but goes on as they try to keep Head Office informed and deal with local debts and in some cases income.
The fact that almost all such staff stay on the job in some cases without knowing if they will get paid never ceases to amaze me (the two extremes I know of was a representative on when being told his company had failed took the cash box and company car an ran for it, the other was a Guy who spend six months in Lagos after the Airline Failure and having told Head Office that he could do no more, was sent a thank you message, but no Ticket. British Airways very kindly flew him home, to discover for some to the period he hadn't been paid).
However normally after seven days most of the 'front line' action will be over and most overseas representation will either have been repatriated, or made redundant if locally employed.
The callcentres and operations centres including crewing and engineering will linger on with decreasing coverage for about six months.
The Head Quarters and Operational Back Office Sections will be rapidly wound down, but a small number of staff will be retained for an extended period as the company is liquidated some might even be there for a year or two.
But most staff will be out of work within two months. For the Customers a ruined Holiday for the Staff a difficult and in some cases bleak future.
It must be borne in mind staff in supplier organizations may also in some cases be affected and some businesses owed a lot of money may themselves go under.
Regardless, the Administration of the Liquidation such a large and relatively organization will continue and indeed in 5 years time may still be ongoing.
Reasons for Failure
The reasons quoted are the result of volatile fuel prices, the economic downturn, and were unable to obtain further funding.
All of which is no doubt true, just as it was for the failures in the past of Court Line, Laker Airways and ILG (International Leisure Group).
But just as in these cases there is slightly more too it than that. Like the three mentioned above XL Leisure Group has expanded aggressively in a very short time. At lot of this expansion following the Management Buyout of 51% of the equity, with the previous owners Avion Group of Iceland retaining 49%.
Such rapid expansion requires funding and that funding is obtained on the basis of sustained growth and a favourable interest rate coupled with NO major changes in operating costs. Well two out of the three have not gone XLLG's way!
It appears that XLLG's failure has caught the General Media at least by surprise, but like Court Line, Laker and ILG the signs have been noted in the Financial and Airline and Travel Industry Presss for weeks, with early indicators back at the end of 2007.
For Example:
Travel Weekly - November 2007 - XL Leisure Group sheds 500 jobs (although the reference to Libra Holidays is I consider the most important)
TTG - June 2008 - XL Leisure Group records £24m loss
Times Online - 31 August - XL Leisure Group enters crisis funding talks
Telegraph 31 August 2008 - Hope for XL after lenders spend the weekend in talks
From the 1st September the coverage in Business sections continued to rise, but I think you have got the flavour of the concerns being expressed.
As additional funding did not come to fruition and the main revenue earning season coming to an end (which obviously had not been that impressive as far as the financial instutions were concerned), then Administration was going to be likely. When it came about the Administrators were obviously so concerned they shut down operations immediately.
(12th September 2008) and the joint administrators decided that immediate cessation of all trading was the only option.
The failure of the United Kingdoms third largest travel group has an immediate effect on customers, staff, companies supplying services to the group (which in turn may affect the staff in these companies) and investors, whether shareholders, or banks and because of the range of XLLG activities these effect will extend globally.
Before background to this failure I think it necessary to list the companies which form XL Leisure Group many of which do not have XL as part of there trading Name and at the same time provide links to useful information to XLLG Customers:
XL Leisure Group - Companies and Holdings
First I will cover companies in the group which should provide British customer protection under the CAA run ATOL Scheme:
- The Really Great Holiday Company PLC - ATOL 3827 Trading as:
- Cruise City
- Excel Holidays
- The Florida Skytrain
- Transatlantic Vacations
- Travel City Direct
- Travel City International
- Kosmar Villa Holidays PLC - ATOL 1760
- Freedom Flights Limited - ATOL 5296
- Aspire Holidays Limited - ATOL 6536
The XL Leisure Group also own the following companies offering services to British Customers:
- XL Airways - Flight No's XLA - Whilst NOT Covered by the CAA ATOL Scheme see this page: CAA run ATOL Scheme See also the ABTA Advisory
- Medlife -See the ABTA Advisory
- In addition it has a 20% Stake in Libra Holidays
- It also has very close relationship with two French Tour Operating Companies CrystalTO and Heliades.
The XL Leisure Group also have Airline Subsidairies in France, Germany and Ireland: Neither the French nor German Airlines have been affected by the Parents failure and continue to trade normally (sources CAA and XL Web Site), but the Irish Airline appeared moribund even before the collaspe:
- XL Airways France Wikipedia Entry
- XL Airways Germany Wikipedia Entry
- XL Airways Ireland
The Commercial Arms of XL Leisure Group:
- XL Aviation -XL Aviation is the commercial sales arm of XLLG. It sells charter capacity on flights operated by XL Airways and also buys and sell charter capacity on numerous other airlines.
- XL24 - XL24 is a dealer in "relief" aircraft in the airline-to-airline market, providing sub-chartered aircraft from the XL Airways and other fleets to other airlines who require the extra capacity on short notice.
- Xtra Airways - USA 19%
- Skywest - Australian 5%
Impact on those who have to deal with the Immediate Aftermath
Whilst the media obviously concentrate on the impact on Customers they never consider the efforts of the failed groups employees and agencies staff who have to deal with the immediate and ongoing aftermath of the failure.
British Travel Group and AIrline failures always seem to be decided in the small hours of the morning (Court Line, Laker Airways, International Leisure Group, spring to mind). This means the first non-executive staff who are aware of the situation are the Night Shift Operations and Crewing Staff.
Whilst being now aware they probably soon won't have a job in the near future, they have to get on with the task of getting a sitrep out to all their Customer Representatives at destinations around the world and to crews Nightstopping overseas, in most cases this will have to be initiated by a Phone Call which will slow things down.
As this progresses they will have to commence the notification of Ground Handling Agencies around the Route Network to brace themselves for what is to come (bearing in mind these Ground Handling Agencies will also be owed money).
The CAA will also be among the first notified and they will have to start the work of planning and implementing the rescue of ATOL covered passengers, plus building it Web Site Advisory Notices etc, other parties such as ABTA will also have to be advised and by this time the Media will be 'on the case'.
Bad News travels fast and soon the Operations and Crewing Centres will be bolstered by PR and Enquiries Staff. By the time the first Passengers start to arrive at European Destination Check-in, most Sections in the affected Airline and Travel Companies will be manned, whether these are customer contact, or not.
Whilst these sections workload will dramatically increase as the day wears on at least they are spared directly facing the Passengers.
Even when pre-warned the Ground Handling Agencies will not have much time to call-in extra staff and initially at least they and the Company Representatives will be overwhelmed, especially as the rest of the Ground Handling Agencies Operations have to continue normally.
The situation will get worse if there are a lot of affected flights through the Airport and each flight has Passengers some of whom are protected under ATOL and some who aren't. With the assistance of the Airport Authority it may be possible to at least move these passengers to a special area of the terminal building. But it is very unlikely that the Company Representatives will have sufficient local funds to provide even Light Refreshments.
Representative at the Hotels where customers are staying will now also be in the 'firing line' and with even less direct support than their colleagues at the Airports.
Whilst the first day is always the worst day in reality, for the company and agency staffs it is usually the second day that seems the worst because although the rescue of the stranded has started, those not covered by the ATOL Scheme will becoming more desperate, and although the general situation will improved at the individual level, the customers will be even more frustrated and angry and the staff attempting to deal with the situation will now be overtired.
By now writs and impounding of assets by Agencies and Airport Operators probably will have started and even as the stranded passengers , crews, station engineers if expatriates and later as the Hotels clear, the Hotel Representatives are repatriated the work for the Airport Based staff changes, but goes on as they try to keep Head Office informed and deal with local debts and in some cases income.
The fact that almost all such staff stay on the job in some cases without knowing if they will get paid never ceases to amaze me (the two extremes I know of was a representative on when being told his company had failed took the cash box and company car an ran for it, the other was a Guy who spend six months in Lagos after the Airline Failure and having told Head Office that he could do no more, was sent a thank you message, but no Ticket. British Airways very kindly flew him home, to discover for some to the period he hadn't been paid).
However normally after seven days most of the 'front line' action will be over and most overseas representation will either have been repatriated, or made redundant if locally employed.
The callcentres and operations centres including crewing and engineering will linger on with decreasing coverage for about six months.
The Head Quarters and Operational Back Office Sections will be rapidly wound down, but a small number of staff will be retained for an extended period as the company is liquidated some might even be there for a year or two.
But most staff will be out of work within two months. For the Customers a ruined Holiday for the Staff a difficult and in some cases bleak future.
It must be borne in mind staff in supplier organizations may also in some cases be affected and some businesses owed a lot of money may themselves go under.
Regardless, the Administration of the Liquidation such a large and relatively organization will continue and indeed in 5 years time may still be ongoing.
Reasons for Failure
The reasons quoted are the result of volatile fuel prices, the economic downturn, and were unable to obtain further funding.
All of which is no doubt true, just as it was for the failures in the past of Court Line, Laker Airways and ILG (International Leisure Group).
But just as in these cases there is slightly more too it than that. Like the three mentioned above XL Leisure Group has expanded aggressively in a very short time. At lot of this expansion following the Management Buyout of 51% of the equity, with the previous owners Avion Group of Iceland retaining 49%.
Such rapid expansion requires funding and that funding is obtained on the basis of sustained growth and a favourable interest rate coupled with NO major changes in operating costs. Well two out of the three have not gone XLLG's way!
It appears that XLLG's failure has caught the General Media at least by surprise, but like Court Line, Laker and ILG the signs have been noted in the Financial and Airline and Travel Industry Presss for weeks, with early indicators back at the end of 2007.
For Example:
Travel Weekly - November 2007 - XL Leisure Group sheds 500 jobs (although the reference to Libra Holidays is I consider the most important)
TTG - June 2008 - XL Leisure Group records £24m loss
Times Online - 31 August - XL Leisure Group enters crisis funding talks
Telegraph 31 August 2008 - Hope for XL after lenders spend the weekend in talks
From the 1st September the coverage in Business sections continued to rise, but I think you have got the flavour of the concerns being expressed.
As additional funding did not come to fruition and the main revenue earning season coming to an end (which obviously had not been that impressive as far as the financial instutions were concerned), then Administration was going to be likely. When it came about the Administrators were obviously so concerned they shut down operations immediately.
2 comments:
Your numbers might not be correct. As a former employee of Xtra Airways in the US It was my impression that XL owned 49 percent of the company, not 19 percent. I worked with XL employees when they would come to the US. I even built their presentation future business plans with all of the future forecasts. I wonder if Xtra Airways will go down with them?
The sources I have seen so far
, all quote XLLG as having a 19% share of Xtra Airwayz. But if they are all using information from the same root source then maybe they are all incorrect!
As for XTRA possibly failing because of XLLG collapse. Well from the XLLG Administrators viewpoint I suspect they see the XTRA Holding as an asset which may generate money for the Creditrs of XLLG.
Also from the little I know of XTRA, they appear to be operating OK and are not reliant on XLLG Support in any critical area.
Whether XTRA will thrive is more down to the state of its markets, not the XLLG Collapse
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