STAFF who lost their jobs when holiday firm XL collapsed plan to sue their former bosses, the Western Mail can reveal today.

Around 150 staff at XL subsidiary Travel City Direct in Swansea’s Enterprise Zone which sold XL holiday packages lost their jobs when the firm announced it had gone into administration on Friday. They are among around 1,700 cabin crew, engineers, baggage handlers, sales staff and check-in staff across the UK to have lost their jobs.

Former Travel City worker Mike Jones, 27, of Port Talbot, says he is angry he has not received his wages this month. He says he finds it hard to believe the firm’s management was unaware of XL’s predicament in the run-up to its collapse.

There were warnings of “financial irregularities” about collapsed tour operator XL two years ago, it has emerged. Accountancy firm KPMG said in October 2006 that it was blocked from investigating alleged misrepresentations by company directors that could have resulted in “material errors” in financial statements.

Mr Jones says he and other former Travel City staff now plan to take legal action to recover wages from Travel City Direct.

Employment expert Rosa Fernandez said former Travel City Direct staff would be backed by the law in seeking wages and redundancy money.

The partner and head of employment law at Swansea-based JCP Solicitors explained: “Under the Insolvency Act 1986, in the event of a company becoming insolvent, employees’ rights to payment of certain sums due to them from their employer in respect of the four-month period immediately preceding the insolvency of the employer (for example wages or salary and accrued holiday pay) take precedence over payment of debts to other creditors.

“These payments are referred to as ‘preferential debts’, which means that they are debts which will be paid by the employer company to employees prior to other creditors’ claims.

“Whilst there is no cap on the amount of payment which can be recovered for accrued holiday pay, the maximum total sum which may be treated as a preferential debt for, for example, wages or salary is £800.”

Under the Employment Rights Act 1996, the Government also offers a limited guarantee to pay certain sums due to employees from their employers, for example statutory redundancy payments and to make up unpaid employer pension contributions, out of the National Insurance Fund, with certain conditions attached. The news comes as the cost of the crisis mounted. Most of the estimated 90,000 tourists hit by the collapse were covered by the Air Travel Organisers’ Licensing (Atol) scheme run by the Civil Aviation Authority (CAA).

But the CAA said yesterday that XL’s Atol bond of around £42m was unlikely to be enough to cover the cost of repatriation and refunding.

Consequently, the CAA is going to have to dip into its back-up fund – the Air Travel Trust fund.

The CAA said yesterday around 55,000 tourists were covered by XL’s Atol and a further 25,000 who travelled with XL Airways were covered by other holiday companies’ Atols.

Virgin Atlantic boss Sir Richard Branson has called for an urgent review of the rules with a view to allowing the air fleet of stricken firms to continue to fly under the CAA’s watch.

He said: “It does not make sense for aircraft to be lying idle at UK airports when they should be used to bring back stranded passengers of that airline.

“There is enormous pressure at the moment within the aviation industry to help with the rescue mission, which we are happy to do, but it should not be like this in the future.”

Meanwhile talks were continuing to try to sort out a rescue package for Italian airline Alitalia. Last week British Airways chief executive Willie Walsh predicted that another 30 airlines would disappear over the coming months, doubling the number that have already gone bust this year.



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