News

Bonds: licensed to kill

By
Sarah Thomas

OPERATORS
have been warned they face crippling hikes to bond fees in September as
insurance companies become increasingly worried about the industry’s future.

Travel
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.

Operators
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.

“The
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.”

TUI
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.

 

Share article

View Comments

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.