MyTravel seals Â£1.3bn rescue despite record loss
Saturday 07 June 2003
The beleaguered package holiday company MyTravel Group reported record half-year losses of £592m yesterday but said it had signed a £1.3bn rescue refinancing with its bankers.
The company, formerly known as Airtours, has secured a three-year lifeline with its lenders, extending the deadline for payment of the debts to May 2006. However, MyTravel still has £220m of convertible bonds outstanding which it is currently required to pay by 30 September. The company is in talks with the bondholders about extending the deadline until December 2006.
The refinancing agreed so far will cost MyTravel £27.5m in amendment fees and other legal and advisory costs. This will be charged to the second half accounts. In addition, a "success" fee of up to £65m will be payable to its banks in three years' time depending on MyTravel's stock market value.
The news about the refinancing came as MyTravel reported grim results for the traditionally weaker six-month period to 31 March. The figures were wrecked by a goodwill write-off of £283.6m, a figure far higher than previously indicated by the company. This included £150m to cover the write-down of the value of MyTravel's four cruise ships and its fleet of 55 aircraft.
Even stripping these losses out, MyTravel recorded record half-year operating losses of £282.7m as the war in Iraq hit holiday bookings. This compared with a half-year loss of £150m last year.
The UK division, which includes the Going Places travel agencies, was the worst performer, recording a loss of £243m. This was blamed on the war with Iraq and the uncertainties over the group's financial position. The US operations were particularly badly hit by the Iraq conflict, with holidays to Europe further affected by the strength of the euro against the dollar.
However, Peter McHugh, chief executive, said he was happy summer bookings are only 5 per cent behind the previous year's level on a 12 per cent reduction in capacity.
The UK has recovered well with summer bookings running at the same level as last year. But bookings are down by 18 per cent in Northern Europe and by 22 per cent in Germany. "After Easter we have seen a recovery across all our businesses," Mr McHugh said. "The UK recovery has accelerated, we are strong in Scandinavia while there has been a slower recovery in North America."
He said UK bookings were strong for holidays in Spain, the Balearic islands and the eastern Mediterranean. Bookings to Middle Eastern resorts were "only slightly depressed" despite the aftermath of the war.
Mr McHugh set the group was on course to cut annual costs by £150m by 2005.
MyTravel is trying to recover after a disastrous 2002 which saw it issue three profit warnings and admit that accounting errors cost it £70.6m.
The shares closed 2.75p higher at 155p.
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