Tens of thousands of Britons could find themselves stranded abroad after the country's third largest package holiday group went into administration.
The XL Leisure Group, which operates XL airlines, flies to 50 destinations, mainly in the Mediterranean.
All its flights have now been cancelled and its aircraft grounded
The Civil Aviation Authority (CAA) said 85,000 people could be stranded abroad and 200,000 have made advance bookings with the company.
David Clover, a spokesman for the CAA, said it would be making arrangements to help customers of the four tour companies within the XL group.
"In respect of people who are currently abroad we're making arrangements and working very closely with the travel industry to organise repatriation flights.
"Clearly though, with XL Airways no longer operating, we're having to bring in substitute aircraft to bring people home."
Economic downturn
An XL flight from Orlando to Gatwick was grounded shortly before take-off. A source at the airport said accommodation was being found for the "distressed" passengers. An earlier XL flight bound for Manchester left as planned.
The group is the latest travel business to face financial difficulties, as the industry struggles with high fuel costs and an economic downturn.
The XL group, which is based in Crawley, West Sussex, runs an airline and owns several travel companies, including Travel City Direct, Medlife Hotels Limited, The Really Great Holiday Company, Freedom Flights and Kosmar Holidays.
The group, which carried 2.3 million passengers last year, has 1,700 employees worldwide.
A statement on the XL group's website said: "The companies entered into administration having suffered as a result of volatile fuel prices, the economic downturn, and were unable to obtain further funding."
Package holidaymakers have financial protection under the Air Travel Organisers' Licensing (Atol) scheme.
But customers who booked directly through the XL website or call centres are not protected.
People who booked through a credit or debit card can contact their card issuer to see if they can refund their money.
Precarious
The Civil Aviation Authority will arrange return flights for people already on holiday, but a fee is payable for this service.
The company flies mainly from bases at Gatwick, Manchester and Glasgow airports.
 |  If the news is true, it is a major, major thing for the industry  Bob Atkinson, Travel Supermarket |
Travel writer Simon Calder said XL had 21 aircraft and flew to the Caribbean, Mediterranean, North Africa and North America, from airports across the UK.
He said: "There are still going to be tens of thousands, maybe hundreds of thousands of people...who find that they are either stranded abroad, or find that they are booked to travel in the next days, weeks, months, and they simply won't be going anywhere, I'm afraid."
Bob Atkinson, of the price comparison website Travel Supermarket said XL's troubles would be blow for the travel trade.
He said: "They are a very large operator and this will send serious shock waves through the industry.
"And what it's going to do more than anything, it's going to highlight how precarious the airline industry is at the moment."
Jim Duwaine, from Portsmouth, said he was given the news when he arrived at Gatwick where he had been due to catch an early morning flight to Menorca.
He said: "Absolutely devastated. Got up at midnight planning on going on holiday, but got let down, unfortunately. We're here, just trying to get some other flights, but it's not looking good. I think everyone else has got the same idea."
XL is the current kit sponsor of West Ham United football club.
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