MyTravel hits fresh crisis after disastrous summer

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The Independent Online

Mytravel lurched into a fresh financial crisis yesterday with the admission that it had failed to make any money over the summer - its most profitable period.

Mytravel lurched into a fresh financial crisis yesterday with the admission that it had failed to make any money over the summer - its most profitable period.

The travel company, already forced to sell businesses to raise enough cash to continue trading, said weak demand during August meant it had to sell holidays cheaply in the so-called "lates" market. It would now report an operating loss for the second half, it said.

This means MyTravel, formerly Airtours, has issued two profit warnings since August, extinguishing all hope that the company had turned over a new leaf under Peter McHugh, the chief executive.

The company, which has been struggling to recover from a series of accounting scandals and years of mismanagement, said the poor summer meant it would have to write down the value of its assets for the second time this year. It wrecked its interim figures with a goodwill write-off of £284m.

MyTravel's troubles contrast with the buoyant picture of trading painted last month by First Choice, its only quoted UK rival, which said it had enjoyed "one of its strongest-ever" summer seasons.

Despite overhauling its accounting practices earlier this year, MyTravel said yesterday that profit in its financial year would be hit further by the adoption of a "more conservative" approach to its books. "This has led to the need for further revisions of accounting estimates," it said.

The warning emerged in a document sent to shareholders before an extraordinary meeting to seek approval for three major disposals: its American cruise, car rental and web-based hotel-room distributor arms.

It added: "The continuing group does not currently have sufficient working capital for its present requirements." From October to January, all travel companies stack up heavy losses as they get ready for the following summer. MyTravel said it would need enough cash to fund "the significant cash outflows" during this period. It hinted at another wave of job losses, "further cost savings" and said it was on standby to sell off yet more businesses if necessary.

Its shares, which hit a 12-month high of 37.5p in July after it sealed a £1.3bn financial restructuring, sunk 10 per cent to 16.25p.

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