MyTravel Recovers From Its Holiday Blues

“I led Xansa’s transformation at MyTravel, haled as a key contributor to the recovery of the travel business”

 The Guardian – Friday June 24, 2005

TravelAgentMyTravel declared yesterday that it was “back on a normal footing” with rapidly rising sales and steady finances after a turbulent couple of years when the tour group nearly went out of business.

Like-for-like sales through its Going Places shops increased 13.8% in the six months to April 30 and the growth was 18% in the following four weeks, said chief executive Peter McHugh.

Reporting a 31% reduction in first half operating losses to £87.8m, the MyTravel boss said the future of the firm was now assured although costs have been cut back including the loss of thousands of jobs and several planes.

“I think the company is back on a normal footing. We are viable and out of crisis mode. There is now evidence that the model and plans we put in place are bringing the results we wanted,” he said. Many travel groups tend to make a loss in the first half but MyTravel said it continued to target an operating profit for all three main divisions in the full 2006 period.

The company’s first half performance this year was also forced to cope with an £11.7m hit as a result of the tsunami in the Indian Ocean which forced it to cancel flights and retrieve customers. “It was a very difficult January and February for the Scandinavian business flying into Phuket and to a lesser extent with the UK business into the Maldives,” said Mr McHugh. It also had £17.5m of extra fuel costs in the first half.

The high price of oil will leave MyTravel with £30m of exceptional costs over and above its traditional energy bill.

It nearly went out of business and lost most of its top executives after a £50m black hole was found in its accounts, managing to pull through late last year only after an £800m debt-for-equity swap which left shareholders with a tiny stake in the firm.

The company has reduced its UK aircraft fleet from 33 to 23, stopped operating its four cruise ships and cut the proportion of its accommodation guaranteed for the UK winter season from 31% to 19%.

Around £12.5m was spent on restructuring the business in the first half of the year. Overall staffing levels have been cut from 22,000 to less than 16,000. Yesterday it said it had agreed to sell its stakes in joint ventures Tenerife Sol and Hotetur for £38.5m.

There has been a switch at MyTravel from concentrating on short-haul holidays to places such as mainland Spain and the Balearics to medium and longhaul vacations to locations such as Egypt, Cuba and Tunisia.

Northern Europe summer bookings were up by 7% while in North America demand increased by only 2% with margins suffering from competitive pressures.

The company admitted that some people had been put off booking with MyTravel because of the uncertainties over last year’s refinancing. This was now over, it explained.

Shares in the company rose 3% to close at 5.66p and Julian Easthope, leisure analyst at UBS, said the financial figures were “impressive”, considering the tsunami and rising fuel costs.

Last week, rival First Choice reported that demand for mainstream holiday destinations was up 11% year on year and 33% for specialist holidays, as the firm reduced its first-half losses to £34.1m.