On The Beach set to avoid CAA case
NORTH West online travel agent On The Beach is confident it will not face legal action from the Civil Aviation Authority over compensation the regulator paid to its customers affected by the collapse of airline XL in 2008.
Simon Cooper, chief executive of the Manchester company, which is part-owned by private equity firm ISIS, said that while the matter was “distracting” and had taken up considerable management time, the threat of litigation has diminished.
He said: “The CAA picked a battle with a similar company to ourselves, based in the south and lost the case. It then appealed, which it lost. It then applied for permission to take the case to the Supreme Court and this was denied.
“So as far as we are concerned it’s off the agenda, and the threat has gone away.”
The CAA’s action related to an alleged breach of ATOL Regulations. ATOL is a financial protection scheme for holidaymakers to make sure they don’t lose money or are stranded overseas.
Mr Copper added: “The matter relates to package travel regulations and we were advised that we had done nothing wrong. If regulations change, we will of course comply with them.”
Mr Cooper said On The Beach was now growing again after a difficult period for the travel sector.
Accounts filed for On The Beach Travel, the group’s parent company revealed a fall in pre-exceptional operating profits from £3m to £2m in the year to September 2009.
The accounts reveal a bottom line loss of £3.7m up from £1.67m in 2008 after interest payments of £3.3m. Gross revenues rose form £107.4m to £124.1m and gross commission from £12.4m to £14m.
Mr Cooper said: “We should see growth this year of around 40% in a market that has been falling 10% per annum in the last two years. With XL going out of business we lost our biggest flight supplier – 30% of our total – and I think we clawed our way back to a reasonable result.”
The accounts reveal that the business, which has debts of £39m, breached some of its banking covenants during the year – but these have since been waived by lender Clydesdale, and new terms agreed.
In June a new capital structure was put in place which saw £3.8m in loan notes and interest written off.
