Comment by J.Skidmore: More pain on the horizon for MyTravel

Can it get any worse for ‘Troubled MyTravel’ as the media likes to refer to them? It’s the question many in the industry are asking after the firm reported disastrous pre-tax losses of £911 million in the year to September 30. The answer, probably, is yes. It all seems such a long time ago since former chairman and founder David Crossland was the darling of the City, regularly reporting annual increases in profit and tour operator purchases as his empire grew ever bigger. Crossland and a host of decent managers have long since gone. And a catalogue of mis-management and debateable accounting procedures, among other factors, have led the company to issue numerous profit warnings since the turn of the century. In the short term, MyTravel will survive. Amazingly, the share price actually rose 25% following the results announcement, mainly because the City was fearing a collapse and there was a feeling of relief when the company announced it was stumbling on. The banks, who now control MyTravel, want to see if the company can trade out of its current position and enable them to recover some of the money they’ve invested. The banks feel they would just lose too much by pulling the plug now. To paraphrase a famous saying, if you owe a bank £911 you’ve got a problem. If you owe them £911 million, the bank’s got a problem. As for the long term, chief executive Peter McHugh is confident they can turn it around and MyTravel can be profitable by 2005. As the BBC’s political editor Jeff Randall said, others are not so sure. I’m one of them. The problem for MyTravel is that consumer and industry confidence has been so badly damaged, the company will struggle to convince people to buy holidays at a price that will give them a decent profit, particularly when there are so many alternatives on the market. My bet is MyTravel will gradually sell off anything worth having – operations in the US and Scandinavia and Direct, Manos, Bridge and Cresta in the UK – before falling on its sword. Of course I could be wrong – it wouldn’t be the first time – but it would be a brave person who would risk anything on them surviving. Talking of which, it is the people who have done just that in the past, the ordinary shareholders, who deserve sympathy. I’m not talking about the former chairman or senior executives who have made their fortunes out of the company, or the banks, but those who took a punt on the firm at 100, 200, 300, 400 or even 500 pence. They’ve been badly let down and, whatever happens, are unlikely to ever see a decent return on their investments. I also feel for the rank and file workers at MyTravel, many of whom work long hours and do an excellent job. Every week they read headlines about the company which must make them wonder whether they’ll be able to pay the mortgage for much longer. But, what goes around comes around and if MyTravel fails to pull through there will be few tears shed in the industry among those who remember the arrogance displayed by the company when it was riding the crest of a wave just a few short years ago.