The travel sector is rightly regarded as one of the most competitive and cut-throat businesses in the world.

Travel firms often dice with insolvency on a weekly basis as their short-term liabilities threaten to overwhelm their slim income.

In an industry where margins are rarely generous, any significant increase in competition can be fatal. In the early 1970s, USIT was living on lean margins by charging students £57 for a round trip to the US.

Its founder and managing director Mr Gordon Colleary was being told by his auditors the fare would have to go up or the company's core business would not be enough to keep it afloat.

Shortly afterwards, a company opened in Dublin controlled by businessman, Mr Patrick Duignan. He was offering hard-pressed students a £49 round trip to the US.

USIT was at a loss to understand how he could survive on margins even skimpier than its own. Times were bleak and Mr Colleary figured students would desert the company if it raised its £57 price.

Mr Duignan starting operating in Britain offering the same cut price deals. His prices made USIT look expensive and added to the gloom at the Irish company. However, a few years later the body of their once powerful competitor was recovered from the River Thames in London. His hands were tied behind his back and it later emerged he had been killed because he had run up huge debts and those he owed had finally run out of patience.

A grim tale but illustrative of the travel trade's brutal competition. Having come through such episodes, Mr Colleary knows a thing or two about living on your wits and surviving big losses. Over the years big names in Irish business - including AIB - have found such a precarious financial lifestyle hard on the heart. The bank sold its 40 per cent stake in USIT in the early 1970s after several years of losses.

It was at that time that some of the company's subsidiaries - Blueskies and Club Mediterranee - were sold to help make ends meet. It was a trying period, not just for USIT but for the industry as a whole and USIT was forced eventually to cut back to the bone to sustain itself. Few people saw it having a future.

Surveying the wreckage, Mr Colleary felt "washed out" and decided to go back to college to finish his degree.

He was asked back to USIT in 1975 as managing director and managed to turn around debts of £200,000. There were many people who doubted his ability to trade out of the debts but over six years the company pulled itself out of the morass.

From the early 1980s, USIT started to produce small but gratefully received profits. Since then its financial performance in many ways has followed a similar curve to that of the national economy.

Consequently it is now experiencing a boom on the back of rising prosperity among students, who no longer confine their excursions to Britain and the United States.

As student affluence has increased so has USIT's reach around the world. It has now grouped all its operations under the umbrella of USIT World. The Irish operation goes under the name of USIT Now.

The company discovered that if travel could be sold at economical rates to students in Ireland there was no reason it could not be sold to students in France, Bulgaria, New Zealand, Spain and elsewhere.

In fact, it is now based in 21 countries and has deals with local agents in another 20. Its business in Ireland now accounts for only 20 per cent of its turnover.

Last year, 150,000 Irish people, generally between 18 and 26years-old, travelled with USIT to various locations. Despite this, its high profile J1 visa programme to the US continues to be its most recognised brand, even though it only involves about 7,000 students annually going on a working holiday. One individual who has worked with the company said this week that one of the handicaps for USIT in putting together deals in the past had been the number of students on its board. Some major investors were nervous about investing in a company where half the board were effectively amateurs in business terms, he said.

Despite this Mr Colleary has always stood by the students, although this could conceivably change in the future. The company is now a huge business and accounts even from four years ago show a turnover of £37.1 million and pre-tax profits of £7.5 million.

Inevitably such growth has prompted the company to think about flotation. Mr Colleary said that, while a date had not been set for such a move, it was USIT World's intention to float. USIT World is now the second biggest student travel business in the world - after Student Travel Australia - and last year copperfastened its position by purchasing 40 per cent of its American equivalent Counsel Travel. It has also taken a 28 per cent stake in a burgeoning Australian listed firm, Travel.com.au.

Last week the story of the company came full circle when it bought out the Union of Students in Ireland's (USI) 12 per cent stake in USIT World for about £9 million.

While student representatives will continue to sit on its board for the foreseeable future, it is clear the company is growing fast and shedding its old student dominated image.

Based on the price paid to USI, the valuation of USIT World could be put conservatively at in excess of £100 million. If this is maintained, a flotation would mean a major windfall for the 200 staff shareholders in USIT World and particularly for Mr Colleary.

According to documents lodged in the Companies Registration Office, Mr Colleary and his wife, Mairin, who live in Sandycove, Co Dublin, are the biggest shareholders in USIT World, with a holding worth approximately £20 million on the basis of the USI deal.

Last week Mr Colleary declined to talk about the company's future and said USIT was working on several big projects. The largest block of USIT stock is held by a trust called Kramerdale Ltd, which controls more than 7.3 million shares. According to the spokeswoman for USIT World these shares - in the event of a flotation - will be distributed among the staff. But the main winner in any flotation would be Mr Colleary and few people are begrudging him his success.

A former board member of USIT Ireland, Mr Pat Rabbitte TD believes Mr Colleary deserves any windfall which comes his way.

"I think he is a financial wizard and a true lateral thinker," said Mr Rabbitte, who first became involved in the company as a student activist but who severed his relationship with USIT in 1994 when he became a Minister in the Fine Gael/Labour/ Democratic Left coalition.

Many years at the helm of the troubled Sunday Tribune have not dimmed Mr Colleary's interest in business or his enthusiasm for making important contacts. Mr Rabbitte said his biggest skill has been in operating adeptly on the international stage, particularly in relation to the J1 visa programme operated with the co-operation of the US administration.

At times, there has been talk of the programme being radically cut back, but Mr Colleary's interventions - with figures as powerful on Capitol Hill as Senator Edward Kennedy - have prevented this. Mr Rabbitte said Mr Colleary has also been skilful in handling the sometimes fractious USI and has been generous and patient with students who have sat on the USIT board.