Saturday’s Morning Star has a very informative editorial which details how and why the tour operator and airline XL went bust:
ONCE again, capitalism has shown its cuddly, people-friendly face with the collapse of holiday giant XL Leisure Group.
Around 85,000 people stranded abroad, several hundred thousand advance bookings dishonoured, staff finding out that they didn’t have a job in mid-flight, over 1,700 jobs potentially vanishing and the Unite union not even being informed by the company that it was in trouble with its refinancing arrangements after a major bank pulled out on August 14.
And yet, in the full knowledge that it was, indeed, in trouble and desperately trying to arrange a bail-out, the companies in the group continued to take people’s cash and make bookings that there was precious little chance that they could honour.
Not that this implies any dishonesty or deliberately dodgy dealing by the companies. Far from it – at least in the terms of the market economy.
The logic of capitalism meant that they had to continue trying to trade their way out of trouble and that same market-oriented logic said that they could not allow any hint of trouble to become public knowledge because people would obviously then cease to book with the companies, thereby sealing their fate.
Indeed, as late as August 31, a company spokesman was saying that “the XL Leisure Group is experiencing strong trading, with bookings for 2009 already outperforming last year.”
But, as for the long-suffering passengers, they inevitably get the sticky end of the deal and, the less well off that they are, the stickier it becomes.
Granted, customers well off enough to book full package deals through travel agencies are covered by the CAA air travel organisers’ licensing scheme and will be offered repatriation flights or their money back if they have an advance booking.
And, if they booked by credit card, their card insurance should cover them.
But people not having credit cards to book with, or booking a flight only, because they could not afford the full package, will face an extra fee to get home.
And it’s not only the passengers. The staff have an even worse situation to deal with.
No jobs and an industry that is contracting by the day, with airlines such as Alitalia and Zoom either collapsing or in terminal decline and a resulting glut of unemployed staff on the jobs market.
So, who is to blame for this situation?
In 2004, the Times reported that a major British bank “is poised to become the largest oil trader in the City of London as banks rush to profit from the soaring oil price and booming oil speculation market.”
In 2008, that same bank pulled the rug out from under XL because of financing associated with fuel. In other words, a major oil speculator shuts XL because the company can’t pay the price for fuel that the speculators have driven up.
And the bank’s partner in financing XL – a major Icelandic bank – acquired the still-profitable French and German XL subsidiaries on Friday morning after the rug-pulling exercise, in what can only be described as a perfect example of asset-stripping, although it would probably claim that it was saving what could be rescued from the stricken company.
But the fact remains that, if the company was stricken, it was the banks that did the striking.
Talk about having your cake and eating it.
It is difficult to imagine a better example of the amoral chaos of market capitalism or, for that matter, a better reason for social ownership of banks and big businesses generally.