Abta and the CAA insist they will “engage” with businesses to help them through the Atol and bond-renewal processes this month.

CAA group director of consumers and markets Paul Smith said: “We understand people remain in a very challenging place.”

Speaking on a Travel Weekly Future of Travel webcast, Smith said: “We’ve tried to work with companies to understand their circumstances. Companies will continue to see a CAA that looks to engage with them.

“Sometimes the discussions will be tough, but we’ll look to engage effectively to try to help. I don’t think we underestimate the challenges for the sector and for individual businesses. We’ll look to factor that into our decisions while still protecting consumers and protecting the Air Travel Trust.”

Abta director of financial services John de Vial described the March bond renewals as “similarly difficult” to September’s, saying: “We have two main levers going in different directions. On the one hand, participants in our March renewals have been through six months’ more crisis.

“On the other hand, the sentiment we’re seeing from investors, shareholders, private equity and the providers of bonds and insurance is at long last improving.

“We’ve been through a much longer tunnel than any of us imagined, but the light at the end of the tunnel is getting brighter thanks to vaccination. There is growing confidence about the recovery curve for the industry and that is important to people talking to investors about refinancing.”

De Vial insisted: “We’re being as flexible as we can in putting aside the normal criteria and focusing on what ultimately matters to consumer confidence, which is that there is the appropriate bond security in place to deal with the consequences of a failure if that happens. And that sits behind the refund credit note regime as well as payments generally.”

He said: “It’s very tough. We’re having difficult conversations in some cases. But I wouldn’t say it’s substantially worse than September. It’s different. We’re nearer the end of the tunnel, but people have had more pain for longer.”

De Vial added “The CAA and Abta are going to have to think about what the recovery timeline looks like. It’s clearly not going to be a one-year cycle to getting back to a more normal balance sheet.”
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