IRELAND’S LARGEST tour operator Budget Travel has ceased trading with the loss of 172 jobs and the closure of 17 shops.

In a statement issued yesterday, the company said it had applied to the High Court to have the company placed into provisional liquidation and for the appointment of Simon Coyle of Mazars as provisional liquidator.

Senior company executives and the liquidator were due to meet the Commission for Aviation Regulation last night to put in place arrangements to cater for holidaymakers currently abroad and for customers who had been scheduled to depart in the coming days and weeks.

Nearly 750 Budget holidaymakers are effectively stranded abroad, the High Court heard yesterday, but the company is to pay for them to be put up in hotels and will also assist in getting them home. Almost 400 other people who booked holidays with Budget and are due to depart on flights this weekend will have to seek refunds from the regulator.

A spokesman for Budget Travel last night denied customers have been stranded, adding that it plancs to repatriate all holidaymakers currenlty abroad with as little disruption to schedules as possible. We would hope that these customers will be able to enjoy the remainder of their holidays once the plans for their return flights have been put in place, he said.

A helpline has been established at Budget Travel to deal with queries from customers concerned about their bookings. The number for the helpline is (01) 661 3122.

Budget said it currently had a bond of €11.4 million in cash lodged with the commission which would be used to assist holidaymakers abroad and refund any deposits or bookings.

Ms Justice Mary Laffoy was told yesterday that Budget had made a profit of €3.9 million for the year ending October 2008 on the basis of a profit of some €5 for each passenger but was “caught off guard” by the speed and severity of the recession. It had massively overestimated projected turnover for the year to October 31st last.

Passenger numbers “fell off the cliff” in the 12 months to October 31st and Budget was left with pre-booked contracts which it could not terminate without incurring onerous penalty clauses, Bernard Dunleavy for Budget said. This meant it was operating at an average loss of €50 a passenger.

Budget also claims the actions of the aviation regulator in allegedly refusing to decide its application to renew its licence on November 1st or to repay some €4 million alleged excess overpayment of its travel bond had jeopardised its business. The regulator on November 16th refused to renew the licence.

Mr Dunleavy said Budget was “pushed over the edge” by demands for repayment of inter-company loans of some €3.8 million which expired yesterday. Budget could not repay those sums, Mr Dunleavy added.

Budget managing director Eileen O’Sullivan expressed her regret at the decision to place the company into provisional liquidation.

“This has been a painful and distressing time for us all and we deeply regret that this situation has arisen.”

Ms O’Sullivan said the ongoing dispute with the commission over the granting of licences for the coming year had brought financial challenges to a head for the group.

“The travel industry in Ireland is facing massive pressure from a sharp and sudden collapse in demand this year,” she added.

“We understand that the commission has a job to do but we sincerely believe that, had our licences been renewed as expected, we would have been able to apply to the courts for protection under the examinership procedures, during which we could have restructured our business to take account of the market collapse.”