One in four Atol holders are not confident of renewing their Atol licences at the end of March, according to a survey by business consultancy FRP Advisory.
The survey of 250 Atol holders found 24% were ‘not very’ or ‘not at all’ confident of meeting the financial conditions required by the Civil Aviation Authority (CAA) to renew their licences.
The renewal at the end of March sees the licences of about 40% of the 1,600-plus Atol holders up for renewal. The bulk of licenses are renewed at the end of September.
The FRP survey did not differentiate between firms renewing Atols in March or September. But it found a similar proportion of Atol-holders, 23%, not confident of avoiding insolvency in the next 12 months without additional financial support.
Two thirds of the businesses surveyed (68%) expected to come under pressure from creditors in the year ahead, with one in five (19%) expecting ‘extreme pressure’.
The overwhelming majority (95%) of respondents reported suppliers demanding pre-payment or payment in full or both. But four out of five (80%) expressed confidence in their suppliers’ financial survival.
And a majority of the Atol holders surveyed (59%) expected 2022 to be a record year for bookings.
The survey results form part of an FRP report Travel & Tourism: Time for Take Off.
Simon Stibbons, restructuring advisory partner at FRP, said: “The overseas travel industry is starting to turn a corner, with pent-up demand ready to be released. But tourism was one of the first sectors to be hit by the pandemic and is likely to be one of the last to emerge, so the industry has a long way to still to go.
“Many firms are approaching an inflection point that threatens their ability to keep trading.”
He said the March 31 Atol deadline “and firms’ preparedness for it, present a severe short-term challenge for operators weakened by the crisis”.
But Stibbons added: “The potential for a strong recovery is plain to see, so it’s critical firms do all they can in the next few weeks, working with stakeholders, to ensure they are able to capitalise on the uptick in bookings in the coming months.”