Troubled MyTravel to lay off more staff

Published on Friday 4 April 2003 01:00

TROUBLED tour operator MyTravel has confirmed it is cutting 2000 jobs and selling its wholesale foreign exchange business in a bid to safeguard its future.

The total number of job losses includes 700 first announced two months ago, and a further 600 workers who have already been told they are losing their jobs.

MyTravel, formerly Airtours, said another 700 positions will go in the next 18 months, mainly through normal staff turnover.

The company has not given a breakdown of where the jobs will be lost, but a spokeswoman said only a small number of the 600 would be in the UK.

The impact of September 11 and accounting problems left the company with annual losses of 72.8 million. Since then, trading has been hit by the effect of the Iraq war on bookings.

Manchester-based MyTravel, whose operations include the Going Places chain, has around 15,000 of its 27,000-strong workforce in the UK.

Its wholesale foreign exchange business, MyTravel Financial Services (MTFS), will be sold for 20.8 million to Travelex.

Under the deal - the FX business arrangement - MTFS will operate MyTravel’s foreign exchange supply business, while the latter’s retail arm will act as the agent for the foreign exchange firm.

A spokesman said: "MyTravel Retail will receive, in addition to the up-front payment, a share of revenues arising from the supply and sale of foreign exchange to MyTravel Retail’s customers."

He added: "The transaction enables the MyTravel Group to realise its investment in a non-core business at an attractive value."

As a result of the deal, MyTravel’s net debt will be reduced by 12.8m, with a further reduction of 8m once the remaining cash is released from an escrow account.

The spokesman said: "The escrow amount will be released to the MyTravel Group at the latest by the first anniversary of completion, provided that Travelex is not then entitled to terminate the FX business arrangement."

The company suffered more than its rivals by the downturn after September 11 because it had rapidly grown its capacity in an attempt to increase market share. This left it with high fixed costs, forcing the firm to cut prices on unsold holidays when the market slumped.