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Airline refinancing should mean cash becomes available for refunds

Refinancing of airlines should open the way for cash to become available to refund holidaymakers, according to Abta chairman Alistair Rowland.

Speaking to Travel Weekly in our latest COVID-19 webcast, the chief retail officer for specialist business at Midcounties Co-operative said he expected cash to be released.

He said he expected refinancing agreements reached by the likes of easyJet, Tui Group and Virgin Atlantic would tackle their reticence to offer cash refunds.

“I do think and hope that airlines’ reticence for refunds is around refinancing and that’s starting to happen. We have seen that in Tui, we have seen that in easyJet and Virgin.

“One would think that part of any dialogue that the airlines are starting to have with government would be around starting to release cash so the rest of the flow of work can progress including Atol bookings for agents and small tour operators.”

Rowland said the next big issue for travel firms is the looming balance payments dates which he said he expected to be pushed back as uncertainty remains about the resumption of travel.

He described the Foreign Office’s move to ban all but essential overseas travel indefinitely as unhelpful but remained confident that travel will resume this summer.

“What we haven’t seen yet, and this is part of the mentality to harvest the cash, is many tour operators offer extensions in terms of payment of balances.

“That’s going to happen at some point. The FCO advice at the weekend in terms of an indefinite date, while that might be a norm for the FCO, is not helpful in this context at all.

“What I think will happen is tour operators will wait and see. Eight week collection dates are likely to move to four weeks while we don’t know the length of lockdown.”

Rowland said he agreed with views expressed in the sector that 2020 will be a “write-off” financially for the sector, but that he expected to be back selling holidays for this summer.

“It does feel like operations will start to normalise in July although no one knows how the consumer will take that, whether they’ll be reticent to travel or they’ll be desperate to get on a plane. I suspect there will be a bit of both.

“It seems like the larger players in the industry are looking to take advantage of the back end of summer.”

However, Rowland doubted demand would rebound to usual levels and that “survival is where travel businesses will have to be throughout 2020”.

“While many firms might take the profits in their books when something is booked, actually this is not about profit right now, it’s about cash. It’s about getting through and having enough cash.

“Certainly, in terms of getting bonding done for Abta and the CAA, it’s about having enough cash to last the early part of the winter and start the programmes in full.

“I think I’m in the same place [as those saying summer 2020 is a write off] I just think we will be selling some stuff, but I imagine the demand will be only half what we are used to.”

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