Concern over forward bookings as Lowcost Travel Group goes into administration
Restructuring and recovery specialists from Smith & Williamson LLP and CMB Partners UK Ltd have been appointed as joint administrators to Lowcosttravelgroup Limited and other companies in its group.
In a joint statement, administrators said they were called in ‘following exhaustive attempts by the group’s directors to rescue the group, which has been hampered by the recent and ongoing turbulent financial environment’.
Approximately 27,000 customers are currently in resort and there are 110,000 who have booked with Lowcost who have not yet travelled.
The statement added: "All flights as regards those currently in resorts have been paid for and hence customers will be able to fly home when their holidays are over.
"Unfortunately, as regards customers who have not travelled as yet a small number will have problems as regards their flights not having been paid for and many will have problems as regards their hotel rooms not having been paid for."
The statement said 120 redundancies have been made from Lowcost’s Gatwick office, 264 from its Krakow office, 60 in Majorca and seven in Switzerland.
Lowcost has blamed a number of factors, including Brexit and the recent spate of terrorist attacks.
The statement explained: "A range of factors contributed to the group’s demise, including increased competition in the sector and the more recent Brexit referendum which the directors have indicated had a twofold impact: uncertainty prior to the referendum caused some customers to delay holiday decisions; and a more expensive Euro since the outcome of the vote has dissuaded the British public, which represents 60% of the group’s customers, from booking holidays.
"The directors have also highlighted the negative effects of the terror threat on the travel industry with a number of destinations now much less attractive for travel to and sadly this list includes destinations like Egypt, Turkey, Tunisia, Orlando, Brussels, Paris and this list will now include Nice."
Finbarr O’Connell of Smith & Williamson added: "The group experienced significant market headwinds in the run up to the EU referendum as holidaymakers delayed decisions.
"This was compounded by the Leave vote itself and the subsequent fall in value of the pound.
"Regrettably, in these extraordinary conditions, the directors had no option but to place Lowcosttravelgroup Limited into administration.
"Whilst we have not been appointed over the foreign subsidiaries which deal with the group’s customers we are aware that the directors of those companies are making all efforts to put useful and relevant information on the group website to assist customers to understand their individual positions."
He said administrators will meet with Spanish regulators and authorities ‘to investigate what compensation may be available to customers who have lost money due to this collapse’.
Lisa
Lisa joined Travel Weekly nearly 25 years ago as technology reporter and then sailed around the world for a couple of years as cruise correspondent, before becoming deputy editor. Now freelance, Lisa writes for various print and web publications, edits Corporate Traveller’s client magazine, Gateway, and works on the acclaimed Remembering Wildlife series of photography books, which raise awareness of nature’s most at-risk species and helps to fund their protection.
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