This is the first of a two-part exclusive interview with Phil Wyatt. Read part two of the interview here

Phil Wyatt (pictured) looked a lot better when I met him than he had the last time the world saw him. The former boss of collapsed XL Leisure Group was last seen fighting back tears at a televised press conference in Gatwick.

The travel giant had gone bust, leaving thousands of agents and customers out of pocket and the industry grappling with the biggest failure since ILG folded in 1991.

The national press hounded him, sending helicopters over his house and photographers to camp outside the front door of the man “who ruined thousands of holiday dreams”.

Wyatt went to ground, so it was surprising when he agreed to be interviewed. But three months on since the company went bust, Wyatt was keen to give his account of events: how the failure unfolded, who he feels was to blame and how the business was almost saved. Here, only in TTG, Wyatt tells his side of the story.

Setting strategy
“We brought Peter Owen in as chief operating officer in March 2007 and made him group chief executive in June 2007, a year before the company failed,” said Wyatt.

“The board knew I wanted to step down and do something smaller, so the plan was for Peter to work on the refinancing and I would stand down but stay on as deputy chairman.

“This was a role that took me out of day-to-day management as it was a role that was part-time. In essence, I was running down my year’s notice on my contract.

“My skills set is entrepreneurial, not corporate; but Peter was originally a non-exec of XL and had all the right credentials along with a formidable CV.

“XL had grown from being just a UK-based brokerage to something pretty big, with operations also in France and Germany.

“After spending nearly 10 years of my life building XL it was obvious I wanted to leave with a bit of money. I had some ideas for a new venture, though nothing concrete, so I thought I would take a break, maybe travel for a year, then do something more hands-on.”
Wyatt said Owen started very well.

“He brought in some excellent people, like Phil Aird-Mash, with Steve Barrass and Mark Slater also from MyTravel to complement an exceptional team XL had in place,” said Wyatt. 

“As a business, XL had turned a significant corner: Aird-Mash and the team had got control, it was in good shape and future sales were 11% higher than the previous year. 

“The on-time performance of the airline was excellent and we were also starting to see the West Ham sponsorship kick in with far better consumer recognition.

“If only we’d had the fame when we were alive that we had when we were dead, just imagine how successful we’d have been.”

Owen bankrupt
But the improvement was not to last.

The first sign that things were starting to unravel came in June.

“Peter Owen was declared personally bankrupt but was due to speak at the ITT conference (TTG June 13). I had to call him and tell him he wasn’t going on the stage,” said Wyatt.

“Phil [Aird-Mash] didn’t want to take over as chief executive of the whole group so, since I was the largest shareholder, I said I was prepared to stand in as interim group chief executive. 

“Phil and the rest of the board knew that my longer-term intentions had not changed, and it was on this clear understanding that I took the role on."

Fuel and the crunch
“But it soon became clear that with the spike in fuel, we had some major issues. 

“I was disappointed with the progress that had been made on the refinancing due in part to the turbulent state of the markets. The refinancing, on closer scrutiny, just hadn’t reached a maturity that I was led to believe.

“As I said, the credit crunch had also started to bite and we had to go and speak to the people behind the management buyout loan for $280 million.

Worst-case scenario
“Before XL folded, I had thought the worst-case scenario would be that the banks would have to take equity for the debt – and that while I and other shareholders would have lost our money, the company would still have carried on. 

“I would have lost my shareholding and it would have been distributed among the new management team as ‘sweet equity’, but at least XL would have continued. At that stage, I would have been happy with that.”

Refinancing
Wyatt was on holiday in Crete in August when he decided to travel back to the UK to meet the two Icelandic banks behind XL: Landsbanki and Straumur Investment Bank. The guarantor on the management buyout loan, Eimskip, was also present and the parties tried to finalise a protracted discussion and deal with a proposed refinancing plan called “Phoenix Wings”.  

Phoenix Wings was a deal brokered by E Clear, XL’s credit card merchant services provider and driven by E Clear chief executive Elias Elia and his advisory board. The plan, described by Wyatt as a “brilliant business concept”, would have seen XL and other struggling charter airlines and operators merge. 

“It was a solid plan that would have created one business of huge strength,” said Wyatt. 

“But the meeting broke down on August 14 mainly because the banks couldn’t come to an agreement on how the debt would be financed,” he revealed.

Wyatt was then given assurances from Straumur that they were going to back XL. 

“They didn’t want to do the Phoenix Wings deal, but said they would back XL as a business.

“So although I went back to Crete very upset [that he’d lost his £36 million shareholding], the sobering thought was that at least the
business was secure – or so I thought.”

Unbeknown to Wyatt, while he was in Crete, events would take a dramatic turn for the worse. Read part two of TTG's exclusive interview here

• TTG reporter caught up in XL chaos (12 Sep 2008)
• 'Most challenging airlift ever' (12 Sep 2008)
• XL's final passengers flown home (29 Sep 2008)
• XL auditors under investigation (16 Oct 2008)