Collapse of Budget Travel leaves 747 stranded abroad
Thursday November 26 2009
OVER 700 holidaymakers have been left stranded following the sudden collapse of Ireland's largest tour operator, Budget Travel.
The aviation regulator was last night working to bring those tourists home and contact hundreds more who were due to fly out over the coming days, in particular those who were meant to be departing early this morning.
Some 747 Budget customers are currently overseas -- 521 of them in Lanzarote and Gran Canaria. Another 126 are in Fuerteventura, 72 are in Sharm El Sheikh in Egypt and 28 on the holiday island of Madeira.
A spokesman for the Commission for Aviation Regulation said the €11.4m cash-bond lodged with it would ensure all customers overseas would be repatriated and any reasonable vouched expenses would also be covered.
The bond will also be used to refund those customers who had booked a holiday but had not yet travelled.
Axed
The collapse of Budget Travel, after almost 35 years in business, will see the closure of its remaining 17 shops and the loss of another 172 jobs. In September it closed 14 shops and axed 95 jobs.
The Transport Salaried Staff Association (TSSA), which represents workers, said those who lost their jobs must be offered a "proper redundancy package". It is still locked in a legal battle with Budget's parent company, Primera Travel, following the first wave of redundancies.
"Primera Travel are a very wealthy Scandinavian company and they cannot just cut and run from Ireland," said union general secretary Gerry Doherty. "This is a shock to the remaining staff but it underlines the lack of commitment by large multi-nationals to their overseas workforce.
"It is all too easy for them just to pull out and dump their Irish workforce," he added.
In a statement, Budget said the company was to cease trading from last night. It added that it had already drawn up contingency plans to make arrangements for those holidaymakers already abroad and those due to travel.
Eileen O'Sullivan, managing director, expressed her deep regret and sadness at the decision to place the company in provisional liquidation.
"This has been a painful and distressing time for us all and we deeply regret that this situation has arisen. We particularly regret the impact of the decision on our loyal customers and on our colleagues across the company."
Dispute
She said Budget's dispute with the regulator over the renewal of its license for the coming year had "brought financial challenges to a head".
"The travel industry in Ireland is facing massive pressure from a sharp and sudden collapse in demand this year.
"We understand that the commission has a job to do but we sincerely believe that, had our licenses been renewed as expected, we would have been able to apply to the courts for protection under the examinership procedures, during which we could have restructured our business to take account of the market collapse," she added.
Ms Justice Mary Laffoy in the High Court yesterday appointed Simon Coyle of Mazars as provisional liquidator. The court heard that the company was "caught off guard" by the severity and speed of the recession and that passenger numbers "fell off the cliff" in the 12 months to October 31 last.
It has losses of €9.4m and was effectively operating at an average loss of €50 per passenger.
Despite this, the company's financial projections for next year had indicated a return to profits, if it "hedged its bets" and nothing else went wrong.
However, the commission's refusal to renew the license led Primera to lose confidence in Budget and it demanded repayment of some €4m in inter-company loans. The court heard that Budget was unable to pay the money sought.
Budget has set up a helpline -- 01 6613122 -- to deal with customer queries that will be open from this morning.
- Breda Heffernan and Tim Healy
Irish Independent
