The XL Leisure Group has denied persistent rumours that it is on the verge of acquiring Libra Holidays.
Deputy chairman Phil Wyatt admitted the group had been involved in talks with the struggling Cyprus-based operator. XL owns the Excel Airways Group, which fulfils much of Libra’s flight needs.
He said: “We are working with Libra to help it restructure and we are working on making its programme smaller.”
The Greek islands and Cyprus specialist is available through close to 4,000 travel agencies and is licensed to carry 160,000 customers annually.
Wyatt added that the talks covered the airline’s contract with Libra, which expired at the end of the summer. Much of the negotiations are centred on seat pricing.
He added that any cuts in flying commitments with the operator were part of the airline’s wider capacity cuts – around 22% – planned for next summer.
XL is not the only party interested in ensuring Libra’s survival. An earlier rescue package put together last week could not be agreed by creditors. Industry sources suggest the outcome could be clarified in days.
The CAA confirmed it has been in touch with the company, but refused to give any details. Libra Holidays has bonds in place worth £9 million, but it is believed to have been trading beyond this and an early collapse would have led to a sizeable draw on the Air Travel Trust fund.
Sunvil Holidays managing director Noel Josephides, a leading member of the Association of Independent Tour Operators, said: “There is no way they will let this company fail for the simple reason that there are so many aspects of the travel trade linked to it.”
A Libra spokeswoman said: “Libra continues to be fully bonded with the CAA and it is business as usual. Any talks we are in at the moment are to discuss a restructure of the company and how to take Libra forward in the mostefficient and positive way.”
The operator has struggled in the wake of uncompetitive Greek holiday prices and saw its credibility hit by the Helios Airways crash in August 2005.
Behind the scenes
The Civil Aviation Authority’s involvement in talks with Libra implies there may be fears for the group’s future. But the CAA’s consumer protection group typically works with directors, accountants and creditors to ensure a company comes through any problems.
However, the CAA’s responsibility is towards consumers and this can lead to tension with company directors who have a legal liability towards creditors.
A CAA spokesman said striking a balance between the needs of consumers and creditors “is not an easy thing to do”.