MyTravel reveals £900m loss
One of the UK’s largest tour operators, MyTravel, today reported dramatic losses of over £900m in the 12 months to the end of September.
The worse-than-expected results have again fuelled speculation that the company could be on the verge of bankruptcy – an accusation that is strongly denied by the group’s management.
Exceptional items accounted for more than half of the total sum. But what was described by chief executive Peter McHugh as ‘an extremely poor year’ for MyTravel, also resulted in an operating loss of £358.3m. It is that figure that has worried analysts most, suggesting that the underlying business is struggling.
Mr. McHugh commented: ‘This very disappointing result was due to a combination of factors. A significant proportion of this operating loss was due to legacy and one-off issues. Furthermore, the group’s structural issues prevented us from responding effectively to an extremely tough trading environment.’
He also claimed that poor management information systems had not allowed the company to accurately predict demand and change its holiday provision accordingly.
My Travel, which also includes brands such as Cresta and Air Tours, is in the process of restructuring and cutting fixed costs, with an aim of reducing outgoings by at least £150m in the next two years.
And ironically its increasing losses have led to suggestions that it is veering further away from bankruptcy, with City analysts pointing out that banks and financial institutions have poured so much money into My Travel that they will want to see it continue as a viable business in order to try and recoup their investment.
Bookings for this winter are down by around 17% – in line with the company’s expectations – as are bookings for next summer.
