The troubles of the Alfa Star travel agency are another example of a company that has failed to cope with the difficult situation on the travel services market. However, the company, which until recently was among the top tour operators in Poland, did not go bankrupt overnight. The right reaction could have saved it.
Currently, we know little - Alfa Star has announced a loss of financial liquidity and that it will not fulfill its obligations under tourist service agreements concluded with customers. company bankruptcy we can only speak after the court confirms this fact, at the request of creditors or the debtor himself, which has not happened yet. Nevertheless, it is a fact that tourists staying abroad must be brought to the country, which may cost even the equivalent of the insurance guarantee, i.e. about PLN 20 million.
Travel agents are typical businesses. As with all commercial entities, tour operators are also influenced by external and internal factors that shape market conditions. Thus, there can be many reasons for a loss of liquidity. However, the most common cause of bankruptcy is wrong management decisions and, more specifically, in crisis situations, reacting too late and failing to take action to introduce restructuring procedures. Troubles and problems with failed investments, with delayed payments, with exchange rate risks are experienced by almost all market players in all industries. Therefore, travel agents, like all other businesses, should also skilfully protect their liquidity and increase their resilience to external cyclical factors.
In the case of Alfa Star, the crisis was caused by several specific factors. The first was the collapse tourism industry in the main destinations of the office – Egypt and Turkey. For reasons beyond the control of the tour operator, the main market of its services brought in over 30 percent less revenue than in previous years. It started with the crisis, and then the Arab Spring in 2011, as a result of which the number of tourists decreased significantly. This year's terrorist attacks in both countries had a negative impact on the sale of the offer, to which the company should also react appropriately, adapting to the new crisis situation.
Bad situation companies also deepened malinvestments. Last year, Alfa Star invested in the 4YouAirlines charter flight business, which clearly did not bring the expected profits.
So, trouble the company has been dragging on for many years and it is incomprehensible why the company's management did not decide to restructure at the right time company or at least a change in the adopted operating strategy.
It is also possible to use the tools provided by the Bankruptcy and Restructuring Law. Court protection simultaneously increases the chance of regaining financial balance and is more likely to fulfill current contracts with clients. The solution is therefore beneficial for entrepreneurs, but also for travel agency clients who are abroad at the time. However, in order for the court to agree to implement the restructuring procedure, the decision to introduce it must be reported in the first phase company crisis, and not in its final stage. Appropriately quick and even preventive action is a key factor in determining the success of the change process.
Current legal provisions help entrepreneurs in restructuring, although still in a rather limited way. They enable the protection of financial liquidity. Among others, remedial proceedings or arrangement proceedings, or enforcement from the company's income, are used for this purpose. Remedial proceedings allow for improving liquidity and reactivating operating activities that generate income, allowing for the repayment of creditors without degrading the value of the company. From January 2016, companies will additionally have the opportunity to use the tools provided by the restructuring law.
If an entrepreneur notices unfavourable changes in individual areas of the company's activity, a loss of financial liquidity, they will be able to use restructuring tools under the supervision of the court. The new restructuring tools are aimed at entrepreneurs in the segment of small, family travel agencies, as well as corporations, such as airlines. In choosing the most favourable scenario Restructuring entrepreneurs are supported by qualified advisors restructuring, who design and implement repair procedures, and sometimes even take over the management of the company for the duration of the proceedings. A well-selected and implemented repair procedure allows for the continuation of operational activities, generating profit, and in some cases, it is even possible to limit costs or reduce selected activities, thanks to which the company's condition can improve in a short time.
The example of Alfa Star and other offices declaring insolvency should not be a prediction of a deep industry crisis tourist, or the recession of the Polish market. However, I would treat this as a warning for companies that are doing well today. It is worth remembering that knowledge and vigilance can save many entrepreneurs.
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