p10-11 wyatt pt2 dec19 17/12/08 20:54 Page 10
news Phil Wyatt exclusive interview
ttglive.com
XL should never have g
EXCLUSIVE INTERVIEW, PART TWO: In the concluding part of
“Unfortunately, we were so confident of the
his exclusive interview with TTG, former XL boss Phil Wyatt reveals
banks refinancing XL that we did not take this
process any further. In hindsight, this was a
how he strived to save the company, the reasons for the group’s
mistake,” he admitted.
collapse and what he should have done differently. By Lucy Huxley “In addition, Virgin was very keen to buy
Travel City Direct. A deal was still being
L
ast week, Phil Wyatt, the man at discussed days prior to the company’s failure.”
the helm of the collapsed XL Leisure Wyatt added: “I understand Virgin has
Group, revealed how things started concluded a deal with [the administrators] for
to unravel this summer for the UK’s the company name and data, so I assume Travel
third-largest tour operator. City Direct will trade again under the Virgin
In today’s compelling sequel to his first umbrella at some point in time.
interview since the group went bust, Wyatt “XL needed between £60 million and
reveals how within hours of striking what he £70 million to see it through the winter
thought was a rescue deal, conversations were, and with the huge drop in fuel price, the
unbeknown to him, taking place which he requirement would have been reduced.”
believes sealed XL’s fate. Breaking his silence: Wyatt’s interview in last week’s TTG
CLOCK TICKING
RESCUE THWARTED “Suddenly, things were totally out of order. “On September 9, we met with the lender group
As TTG revealed last week, Wyatt had held talks XL couldn’t even pay its direct operating bills, in the afternoon, but by 20.30 they confirmed
with the two Icelandic banks behind the group, even though the accounts had more than they weren’t going to back the business in cash
Landsbanki and Straumur Investment Bank, sufficient funds,” he revealed. terms,” he recalled.
about a refinancing plan. This would have seen “At that point, XL could not trade without “The following morning, Eimskip announced
XL and other charter airlines and operators support from its lending group. Straumur that it would be prepared to write off the
merge under a venture called Phoenix Wings. continued to provide minimal credits to keep $280 million it had guaranteed. Had we known
That meeting had broken down on August 14 the business running and by doing so, it this seven days earlier, it’s easy to assume
mainly because the banks could not come to an succeeded in forcing the XL board to give things would have ended differently.
agreement on how the debt would be financed. security over XL Germany and XL France. “It is most likely we would have sold XL for
But although they did not want to do the “Without the panic situation that was a cash injection only. After all, XL France alone
Phoenix Wings deal, they said they would back created, I believe we could have sold our assets was worth in excess of this, let alone the other
XL as a business. or raised new securities.” brands XL owned. We simply ran out of time.”
Wyatt flew back to Crete, where he had been Wyatt claimed that XL France and XL Germany During this period the XL board met every
on holiday with his family, with mixed feelings. were debt-free and had no registered charges, day, sometimes twice, Wyatt revealed.
He knew the deal meant he would lose his £36 and that XL France alone had recently been “Every step was carefully evaluated and
million shareholding in XL, but at least he felt valued at between ¤70 million and ¤110 million. decided with advice from our legal team. On the
the business would be saved – or so he thought. “If we had sold those two assets in an orderly evening of the 9th, the board requested that all
market, we would have covered the majority, if customer deposits be ring-fenced in a special
FINANCIAL MELTDOWN not all, of our debts,” he said. account and not used for operational expenses.
Unfortunately, at that time, the financial markets “In July we had tested the market with a “That night [September 10] I didn’t sleep.
were getting more desperate by the day and short teaser on XL France. This was carried out The entire team carried on for 24 hours trying
Wyatt said Straumur was eager to get additional by an investment bank and we received positive to get a deal done. The next night was also
guarantees backing its credit revolver. replies from Thomas Cook and Tui. horrendous. At that point, we had come to
“When arriving back in Crete, I learned that realise that hope was running out. And on top
Straumur had met with Barclays, XL’s bankers,
“Those tears I
of that, we really didn’t want XL to fail on 9/11.”
without any of the XL directors, to try to
negotiate a future solution to XL’s fuel hedging
cried up on that
Wyatt explained that when all hope was
gone, the XL board and its legal team planned
instruments, provided by Barclays.
stage weren’t
for XL to cease operations at 2am on Friday
“In essence, the result of that meeting was
that Barclays got really nervous and closed
crocodile tears –
September 12, when all aircraft would be in
the UK or in the air en route home, causing
down these instruments, crystallising an
they were real”
minimum disruption.
immediate loss of $42 million for XL. As a result, “At 1am, I sent an email to all my staff and
Barclays froze all of XL’s accounts,” he said. Phil Wyatt told them all that had happened and how we’d
10 19.12.2008
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