Published on Wednesday, June 24, 2009

Warning over major industry failures

Online financial protection firm is warning of possible major failures in the next 12 months as cash runs dry in the travel industry.

It came as SkyEurope filed for creditors’ protection to restructure its debt yesterday (Monday).

Last year proved the largest losses to the airline industry in its history with over 50 airlines collapsing, many of them small to medium in addition to XL Airways and Nationwide in South Africa.

As the credit crunch continues at pace into 2009 with no sight of immediate recovery, the major airlines left who rely on the term ‘cash is king’ are now running out of time, the company claims.

Director Paul Mclean said: “This has become a normal day at the office, but companies such as SkyEurope just cannot continue to hemorrhage money, sadly there will be others.

“Consumers have read about many large corporate failures in many industries over the last 12 months demonstrating that no company is exempt from failure.

“Airlines and other sectors of the travel industry simply cannot continue with the spiraling events affecting their business, from the credit crunch already crippling their financial suppliers to the large drop in demand for travel. “

The company runs an affiliation programme allowing websites to link and earn an introductory commission for each policy sale. Alternatively, annual corporate cover is available covering all agents’ ticket sales.

“As we now start to see bigger failures on the horizon, it’s critical that the travel industry take out insurance protection for their business exposures and to cover their clients. Such large exposures could easily ruin travel companies in the UK,” Mclean said.

by Phil Davies 

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  • Insurers taking risks

    Sorry Robert, was more so interested in why you appeared so insurance adverse thought you may have experienced this insurance or these companies before. People are always wary of insurance companies so much but we all buy it and have a choice to buy it. Back to the point, the insurance industry always highlights the exposures to the public, if there were not any they how could they sell insurance. Like many other people in the UK I constantly get leaflets from Insurers highlighting how I am exposed if I do not have the right medical insurance and how large the bills could be or what would happen to my family if I had a terminal illness. It"s nothing new to me, insurance companies highlight the risk and we choose whether to cover it or not. I know that even with a pre-existing medical condition or points on my driving licence dictating I am a bad risk I can still pay an additional premium to an insurance company to cover me. But having dealt never dealt with these insurers you would not know the answer to this. Certainly people don"t expect any insurance company to provide insurance for a house when its already started burning down as much as an airline already in financial trouble, but we all still insure our houses against it "maybe" happening one day. I don't know the answer myself but maybe these insurers do charge a higher premium for airlines in a poor financial state as opposed to airlines that are already insolvent or in some form of administration.

    By John Harris, Wednesday, July 1, 2009

  • Nice to make your acquaintance John Harris

    The answer to your questions, all three of them is no, but is this not deviating from the point? The point I was making and you may have missed, is this ; we have an insurer talking about major potential failures and offering to insure against them. Now I"m not an insurer but as we all do (in the travel business), I have a little knowledge of how things work and here is the crux of the matter, if an in surer is concerned about potential failures, they will withdraw cover, I believe that"s their nature, and so what"s the point of offering cover in the first place? And as you may be alluding to in your second paragraph if an airline were considered to be in difficulties, insurers would certainly not offer cover, wouldn"t you agree?

    By robert sarran, Tuesday, June 30, 2009

  • Robert Sarran from Club Caribbee i presume ?

    Robert, Presume you lost money with Zoom Airlines last year when you used them for your holidays ? Did you try and get insurers to cover them when you heard that there were problems with the airline and no one would help you ? Did IPP or cover you ?

    By John Harris, Tuesday, June 30, 2009

  • - IPP

    Hi Robert, Noted your passionate comments, perhaps we can meet up to discuss your many comments aimed at my company. Would love to meet up and chat, perhaps you can post your contact details. As you claim you have 28 years in the industry, such discussions would be useful. Look forward to hearing from you soon Kind Regards Paul Mclean Director International Passenger Protection Limited (IPP)

    By Paul Mclean, Friday, June 26, 2009

  • Stop the scaremongering!

    Lately all I seem to be reading about is "Major Airline Failure", do the people who make these claims know something that the rest of the industry doesn"t? The heads of some of the major airlines are themselves guilty of this. What is the gain in scaremongering? Is it to gain a competitive edge over ones competitors? Is it to cast doubt about a company"s future? Or is it to create an opportunity from which one can benefit? 28 years in the industry and I don"t want to see anymore failures, I don"t want to see that we have such a fragile industry that it"s falling apart. And I don"t believe it is. It was sad to see Woolworth"s go and sad to see the loss of so many other High Street names, today I wish everyone in business the very best of luck, I don"t want to see any more failures. Am I in the minority? So when I read this article I shudder to think that we haven"t seen the worst yet and that there"s more to come. But I"m a little confused, surely it isn"t being suggested that an insurer is telling us that the doom and gloom is not over and then offering us insurance to cover against further failures? I was under the impression that insurers weren"t taking risks but the article clearly states that there are "bigger failures on the horizon" so we must take out insurance cover because such exposure could ruin us. Am I being a cynic or is it the case that cover will only be given against risk on specific carriers, if so you can bet your bottom dollar, it will only be on the "risk free" airlines, or does anyone have claims that have been turned down by or their other company IPP? And if so which carriers did they not cover?

    By robert sarran, Thursday, June 25, 2009

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