When Peter McHugh stepped into the cockpit of the troubled tour operator, MyTravel, in late 2002, cries of 'Peter McWho?' reverberated around the travel industry. Outside his native North America, where he was best known for his role in breaking up the former US behemoth, Pan Am, the man charged with breathing life back into the one-time British package holiday king was an unknown quantity.
In his first interview since taking on the poisoned chalice that was MyTravel, Mr McHugh admits that even he, the former head of its US arm, had no idea of the scale of the task he was taking on. "The state of affairs in the company - and this is embarrassing to me because I was on the board - in arriving here from North America was that things were so much different from what I thought they were."
The implosion of MyTravel, formerly known as Airtours, had it all. Black holes in its accounts, Arthur Andersen as auditor and a chairman, David Crossland, who had built up the business into the UK's biggest tour operator from just two Lancashire-based travel agents in 1973. There wasn't exactly a queue of candidates to take over from the hapless Tim Byrne, who presided over the company's near-collapse during his short spell at the helm.
Mr McHugh, a former Vietnam war veteran, now says he was talked into taking over "before I knew all the facts". He adds: "I originally thought that this was just an aberration, a collection of one-off problems that could be resolved over the period of a year to two years, but that fundamentally the business was solid underneath. That turned out not to be the case."
A painstaking 18 months followed during which Mr McHugh barely paused for breath between bankers' meetings as MyTravel sunk deeper and deeper into the red. "I had pretty much decided that I was in it for the full ride but I must admit that I worried sometimes about whether we were going to be successful or not," he confesses. Losses climaxed at £991m in December 2003, debt at more than £1bn and the company's future was firmly in the hands of its banks.
Luckily, Mr McHugh was no stranger to adversity when it came to travel companies. The airline industry-lifer - he joined Trans World Airways from graduate school in 1974 - spent seven fraught years at Pan Am from 1988 to 1995. First hired to try to save the airline from going belly-up, he eventually wound up liquidating the now-defunct carrier after a rescue deal with Delta fell through. In fact, the short stint he spent running the cruise line Holland America stands out as one of the rare untroubled spells in his business career.
During all those round-the-clock meetings with bankers, which eventually wound up in the company swapping £800m of its debt for 88 per cent of its equity, Mr McHugh's saving grace was that he is by nature, "very hopeful and optimistic". Such optimism was not shared by the wider travel industry, which was on permanent standby to mop up the pieces should Mr McHugh's rescue mission fail. Sightings of the MyTravel boss outside the group's Manchester head office during that most fraught of times were rare: the one notable exception being the launch of the world's biggest cruise ship, Queen Mary II, by Carnival. He braved the limelight for the evening's gala dinner, but looked horrified to have been spotted out of his bunker.
It was a vastly more relaxed-looking Mr McHugh who unveiled improved interim losses yesterday. "The performance in the first half of the year should clearly demonstrate that we're back on target and that we're making all the success that we said we would make," he practically bragged. Despite absorbing a hit from soaring fuel and currency costs, the group expects to return its UK business to profitability this year and achieve a 3.5 per cent operating margin by 2007, as flagged in its restructuring plan.
Mr McHugh puts that success down to having the right people in place to run the business effectively. The MyTravel top team has been stable for some time after an unprecedented period of turbulence. Executive after executive was shown the door, which only fuelled outsiders' suspicions that the company was beyond salvaging. Mr McHugh says now of the exodus: "You can't avoid the fact that there were people who made a lot of bad decisions that got us in the mess that we were in. I found it odd that there was so much press about getting rid of executive directors. Who was responsible for the problem other than the executive directors?"
He had to stamp out the predilection for executives relying on "intuition" rather than a more formal business philosophy. "There was way too much intuition. There was way too much silo mentality, you know, 'I'm going to do just what is right for my parochial interest and I'm not really going to worry about the good of the company'. And I think there was very little team work," he says of those dark days.
Notwithstanding the £70m of losses the group amassed in its first half, a time when all tour operators have to shoulder the burden of high fixed costs, Mr McHugh is confident enough about the group's future to start thinking about life beyond the turnaround. He is midway through a strategic review, which will map out the likely shape of the group in 2009. By then, expect to see it bulk up both at home and in the US, particularly in the booming independent travel market. That is if a rival hasn't swooped on the company.
Either way, Mr McHugh will be preparing to enjoy a quieter life come 2009. Perks such as an annual travel budget - last used last month to take his wife to Paris for their wedding anniversary - and 2.8 million share options currently worth more than £2m are not enough to keep him in the game indefinitely. "I think that this is my last corporate job. I think that I'm going to fade into retirement when this all gets done."Reuse content