ANALYSISTHERE WAS a cruel twist in XL Leisure's collapse coinciding with the commemoration of 9/11, the biggest shock ever to hit the aviation industry.
While rumours about XL's finances had circulated for some weeks, its denouement was so sudden that at least one national newspaper in Ireland appeared yesterday morning carrying adverts from the airline for a Spanish holiday sale.
XL was the second airline operating out of Ireland - Futura Gael being the other - to go bust within five days.
The sad reality is that many more throughout the world will probably be grounded over the next year due to a combination of high fuel prices, cut-throat competition and softening consumer demand.
There is barely a commercial airline flying at present that is profitable and the skies are set to become a lot less crowded in the months ahead.
Zoom has already gone bust while Italy's flag carrier Alitalia has been teetering on the brink for some months.
British Airways is set to acquire Spain's Iberia and Lufthansa is reported to be in talks to take over Scandinavian rival SAS. That's just the tip of the iceberg.
Irish executive Willie Walsh, who heads British Airways, paints a bleak picture. "We've seen 30 airlines go under worldwide and I wouldn't be surprised if it was another 30 in the next 12 months," Mr Walsh told The Irish Times yesterday.
Accounts filed earlier this year with the Companies Registration Office in Dublin give an insight into the difficulties faced by XL's Irish subsidiary.
XL Leisure Group (Ireland) Ltd made a loss in the year to the end of October 2007 of €962,897 on turnover of €12.9 million. That was the company's first full year of trading having posted a loss of just under €300,000 in 2006.
Those financial results came against a more benign economic backdrop when oil cost less than $100 a barrel and when the Irish economy was still flying.
XL's British parent company had to inject €1.55 million to keep the show on the road here.
"The directors expect the company to be profitable in full year 2008," the directors' report stated.
By all accounts, XL's Irish division ran a tidy operation. It carried 63,000 passengers through Dublin Airport this year and is understood to have been up to date with its bills with most of its service providers here.
Nevertheless, the business is gone and XL's eight staff at its Dublin office are out of work.
XL's group chief executive Phil Wyatt said the sharp rise in fuel this year had added $80 million (€56 million) to its costs. He wasn't able to hedge its fuel bill nor could he agree a deal to refinance its debt.
It is becoming increasingly clear that the aviation industry's financial providers are slowly but surely pulling the rug from under the feet of airlines, particularly those that are perceived to be vulnerable.
"They are all very twitchy at the moment," observed Bloxham Stockbrokers' aviation analyst Joe Gill yesterday.
"That's the way these airlines are getting hammered. I don't think we'll see a change in that in the near future."
Fortunately, Ireland's two main airlines - Aer Lingus and Ryanair - are rock solid in terms of their funding. Aer Lingus has more than €800 million in cash in the bank and Ryanair can call on €2 billion worth of capital.
These will be necessary to cushion the losses that will be racked up this year and next. Ryanair is already in the middle of a thorough cost-cutting programme, that includes Michael O'Leary taking a pay freeze.
Aer Lingus chief executive Dermot Mannion has signalled its intention to slash its cost base by up to €100 million.