MyTravel denies disposals pave way for its future sale
Troubled MyTravel is continuing to sell off chunks of its business, yesterday announcing the disposal of its loss-making German business Frosch Touristik along with its operations in Poland.
Private German company RM336 has bough Frosch Touristik for a “nominal consideration”, while a Polish consortium has taken control of MyTravel’s two loss-making operators Ving and Itaka in Poland for “no material cash consideration.” The disposals will result in one-off losses to the MyTravel group of £86 million.
One top level industry source told TravelMole that he believed the disposal strategy would continue until the troubled firm was in decent enough shape to be worth taking over by a rival. The source predicted MyTravel’s operations in the US and Scandinavia would be next to be sold off .
This view was backed up by senior travel industry analyst Mark Riseley from GartnerG2. He told TravelMole: “I would not be surprised if MyTravel was not around in a couple of years. I am not suggesting that they will go under but of the four major operators in the UK they appear to be in the worst shape.”
But MyTravel has denied that it is preparing the way for an eventual sale. A spokesman told TravelMole: “At the AGM it was stated that we would shed the loss-making businesses and concentrate on the core business. There has been a major refinancing. It is all part of the company’s turnaround. We are re looking to the future and while we can’t predict what the future holds this is part of the tidying up of the portfolio.”
But while the Civil Aviation Authority has renewed the company’s Air Travel Organisers’ Licence, concerns about MyTravel’s financial health continue. Observers point to the fact that the recent refinancing agreement with bondholders for £221.6million sees the interest payable on the bonds increase from 5.75% to 7%. A spokesman also confirmed there had been “an equivalent increase” on the main debt refinancing. The company’s total debt stands at £1.3billion.
See recent MyTravel stories:
24 Sep 2003: MyTravel seat-only business to be sold?
16 Sep 2003: MyTravel secures financial lifeline
12 Sep 2003:Massive changes at MyTravel
21 Mar 2003: MyTravel to sue EC over failed First Choice bid
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