OAG Travel News

European budget airline and tour operator XL Leisure Group PLC failed Friday, the latest casualty of high fuel prices and the downturn in consumer spending.

XL, the third-largest tour operator in the U.K., canceled all flights and grounded all its aircraft, stranding tens of thousands of British passengers abroad and scuttling travel plans for scores more that hadn't yet left the U.K.

"The companies entered into administration having suffered as a result of volatile fuel prices, the economic downturn, and were unable to obtain further funding," XL said in a statement. "Going forward, the joint administrators are unlikely to be able to trade the business or operate the aircraft."

An XL spokesman, who works for risk-consulting firm Kroll, couldn't provide further details, noting his company was hired only in the early hours of Friday morning.

U.K. Transport Secretary Ruth Kelly said officials were working to arrange transportation home for travelers who are now abroad.

The Civil Aviation Authority estimated there were 50,000 customers abroad who had booked through an XL tour operator, 10,000 on holiday with XL Airways, and 25,000 with other tour operators who shared the XL flights.

Some 200,000 customers had advance bookings with the XL tour operators, the CAA said.

Europe's largest travel group by sales, TUI Travel PLC said its companies, Thomson and First Choice, "are doing everything they can to assist XL's customers stranded abroad in their repatriation to the U.K."

XL Leisure's brands includes Kosmar, Freedom Flights, Aspire and medlifehotels.com. XL's French and German divisions will trade as separate commercial entities after an Icelandic bank, Straumur-Burdaras Investment Bank hf, acquired the subsidiaries, saying it considers them "financially viable and sustainable businesses."

XL's demise comes just days after Spanish charter airline Futura International Airways was placed into administration. Last month, Canadian carrier Zoom Airlines was shut down, hurt by soaring fuel costs and economic downturn.

U.K. business-class carrier Silverjet PLC was also placed into administration at the end of May after failing to secure an emergency cash injection. A handful of U.S. airlines have also failed this year.

Source: http://online.wsj.com