have been warned they face crippling hikes to bond fees in September as
insurance companies become increasingly worried about the industry’s future.
Weekly has discovered two of the UK’s six major bond providers, known as
obligors, are so concerned about the parlous state of the travel market they
could pull out all together, casting a shadow over scores of smaller companies.
with bonds due in the autumn traditionally start confirming their deals with
insurers through the summer, using audited accounts as proof of their ongoing
viability. But bonding expert Christopher Photi, of White Hart Associates,
warned this year’s negotiations are likely to be much more fraught – and
predicted wholesale rate increases.
obligors are all nervous because of the downturn,” he said. “They will want to
look at booking figures and management accounts to see if people are trading in
line with predictions. If you’ve not had a good summer, it could be terminal.”
UK is due to renew its £300 million bond on September 25 – along with Thomas
Cook and First Choice – and company chiefs have admitted its £2 million charge
could double. Airtours has secured its bonding facilities until 2005.