Watchdog sinks teeth into MyTravel

MyTravel, the stricken holidays group expected to announce heavy annual losses on Thursday, is to face a grilling from the Civil Aviation Authority over its trading and financial position.

The CAA will be examining MyTravel's financial affairs in the next fortnight as part of a Low Season Review that all package holiday groups are subject to. The CAA regulates holiday companies on matters such as airline safety but also controls the Atol bond scheme. This requires tour operators to provide a financial guarantee that can be used by the CAA to repatriate stranded holidaymakers or pay customers back if holidays are cancelled because a company goes out of business.

The Low Season Review requires tour operators to prove to the CAA that their businesses can fulfil commitments to holidaymakers and that they are trading in line with their Atol licence.

In April the Department of Transport confirmed it had held a series of meetings with the CAA to examine MyTravel's affairs. A spokeswoman for MyTravel said: "All I can tell you is that we are constantly talking to the CAA to update them on the situation."

The CAA's review comes as the company announces annual results that analysts believe will show losses of up to £700m. The figure includes goodwill write-offs forced on the company because of its worsening trading record.

Last week Duncan Wilson, the director responsible for MyTravel's core UK market, resigned, bringing the number of boardroom resignations to seven in just over 12 months.

MyTravel has stumbled from one crisis to another. Last year it was hit by three profits warnings in five months, which led to the departure of the chief executive Tim Byrne.

The company's share price has collapsed from a high of 283.5p last year to 11p last week. Shareholders have seen the company's stock market value shrink from £1.4bn to £54m.