XL chief executive Phil Wyatt had proposed a contingency plan – to use the operator’s aircraft to bring home customers if his company failed – just two weeks before it collapsed.

Wyatt said the plan, which was rejected, would have prevented customers being stranded or having to pay again for flights home.

Rejection of the plan meant XL aircraft and crew have been left idle when they could have been returning customers, he said.

Industry rumours suggest it was chancellor Alistair Darling who rejected the plan as it could have been seen as illegal state aid for a failing business. Others believe the owners of XL aircraft would not have allowed the planes to fly in case they were impounded in foreign airports.

Wyatt said he suggested the plan to the CAA as part of the “dialogue” about events at XL.

“I went to see them to explore the option that in the event of our Atols being withdrawn we could fly planes out with our dedicated crews," he said.

"They are all there sitting at home and I know they would fly for us - to bring those customers home as they planned.

“Unfortunately, it’s been deemed by authorities, government, whoever, that that is impossible. I personally don’t believe that is the case.

"The reality is this. We have the aeroplanes – they are sitting on the aprons in various parts of the UK – and they just can’t fly for whatever reason to go and pick our passengers up.”

Wyatt also said he believed XL’s bond of £42 million would be enough to pay for repatriating all the passengers who were stranded abroad. However, industry sources have estimated the cost to be £60 million.

Wyatt said negotiations about finding new investors continued until 9pm on Thursday evening, and that some “individuals” were still interested even at that late stage.

He said efforts to refinance XL would have been easier if its former Icelandic owners Eimskip had released a note regarding loan guarantees to XL earlier than Wednesday this week.

The note meant they were making provision to write off the loan of €207 million, and if that had been known just a week before he would have refinanced XL, claimed Wyatt.

“This business would not have failed. You can understand my great upset and disappointment,” he said.

Wyatt added that the rise in oil prices had added $80 million to XL’s costs year on year.

The repercussions of people “making hay” with high oil prices was that 1,700 XL employees in the UK were now potentially out of work, he said.