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More woes for UK travel industry

Last week's sudden demise of Flyglobespan has had an impact on the whole UK travel industry with news of further casualties over the last few days. UK travel outfit Allbury Travel Group, also trading as Libra Holidays, Argo Holidays and Jetlife has fallen by the wayside and there are fears this could be the first of many additional casualties over the festive period. So why has the sector suddenly been hit by a spate of collapses?

Many in the industry fully expected a clampdown by the UK banking industry after the Flyglobespan collapse last week and they have not been disappointed. Due to a mixture of requests for more collateral, higher debt finance costs and general concern about both the UK travel industry and the UK economy, the burden on travel companies has increased. Many of these companies operate on wafer thin profit margins and indeed a number are starting to experience cash flow problems.

In many ways, the domino trail has begun with the collapse of Flyglobespan and there are serious concerns about the short to medium term future of some of the UK's smaller travel companies and also some concern about larger operations. This is a very difficult period for the UK travel industry not helped by the reluctance of banks to step forward with additional capital.

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