Darling acts in MyTravel crisis

MyTravel, the country's second largest package holiday operator, said continuing talks to refinance debts of almost £500m were "progressing well" yesterday after it emerged that Alistair Darling, the secretary of state for transport, had met the industry regulator to discuss the crisis-hit company.

A series of meetings between Mr Darling and the civil aviation authority, the latest of which is understood to have taken place on April 9, comes amid industry concern that the firm is running out of cash.

Formerly known as Airtours, MyTravel has been hit by the downturn in the air travel business since September 11 2001 and a scandal over the way it accounted for holiday insurance.

Under the terms of their licence, tour operators must pay a statutory bond and hold enough cash to cover the cost of repatriating tourists in the event of a sudden collapse.

Mr Darling's meetings with the CAA come as several million people are expected to travel with the company, which operates Cresta, Going Places and long-haul firm Tradewinds, among other brands, this summer.

A spokeswoman for the Department of Transport said yesterday: "The secretary of state has met with the CAA on a number of occasions to discuss MyTravel. The CAA is keeping the secretary of state informed, as you would expect."

The company played down broader fears. A MyTravel spokeswoman said: "We are fully bonded and our licence is in place. Our customers can travel with confidence."

The CAA refused to comment on specific companies yesterday, citing commercial sensitivity. However, a spokesman said: "We have no fears for MyTravel customers or any others because they are bonded."

The CAA is responsible for ensuring that MyTravel complies with the terms of its Air Travel Operating License, which comes up for renewal in September.

Last September the company lodged a £400m statutory bond to help pay for customers stranded in the event of a collapse. To renew its licence MyTravel must also show it has "free assets" equivalent to 3% of its turnover, although the company has said that the CAA operates a more "flexible regime" for larger companies.

MyTravel's share price has fallen from 283p last year to 12.25 last week. In 2002 it reported pre-tax losses of £72.5m following an investigation into accounting errors and cut nearly 2,000 jobs.

It first ran into trouble under chief executive Tim Byrne, who left last year with a £1.2m payoff. Founder David Crossland and finance director David Jardine have also subsequently left.

Earlier this month the company's new chief executive Peter McHugh gave a presentation to lenders as part of efforts to restructure its heavy debt load. A spokeswoman said yesterday that these talks were progressing well and that the company would announce the results to the market as soon as an agreement was reached.

The Department of Transport and the CAA stressed that it was the regulator's responsibility to police the industry yesterday. However, the government guarantees the Air Travel Trust Fund, which is designed to meet the financial demands of an operator's collapse over and above the individual company bond. The fund needs a top-up as it is in deficit by £9m.