Around 1,200 British holidaymakers have been stranded abroad following the collapse of Birmingham-based tour operator Sun4U.

The Spain and Mallorca specialist announced on its website at 9pm on Thursday night that it had ceased trading, and has advised passengers to contact ABTA for information about refunds or arranging alternative holiday plans.

Most customers stranded abroad are in Spain.

Sun4U is believed to have suffered badly due to the flight ban caused by the Icelandic ash cloud crisis. According to The Guardian, around 40 members of staff at its call centre were informed of the collapse yesterday morning.

ABTA has advised that customers who had booked ATOL (Air Travel Operators’ Licensing) packages should be able to continue with their holidays as planned.

An ABTA spokesman said: “There are approximately 1,200 people away at the moment and most of them are in Spain. Anyone who has booked a package holiday must contact the Civil Aviation Authority (CAA) or contact the supplier named on their invoice.”

The CAA confirmed that repatriation measure were being put in place for all passengers with ATOL packages. However it warned that passengers who used Sun4U merely as a travel agent to book flights would have little protection.

A CAA spokesman said: “The CAA will be putting arrangements in place to ensure ATOL-protected Sun4U holidaymakers who are abroad can finish their holidays as planned and return to the UK.

“For ATOL-protected people who have holidays booked in the coming weeks with Sun4U, they should submit claims for repayment to the CAA.”

Sun4Udirect.com specialised in holidays on the Spanish coast and Mallorca. It advertised a “dynamic packaging” service offering “much greater choice and greater flexibility” for holidaymakers.

The demise of Sun4U follows that of Surrey-based tour operator Goldtrail Travel, which specialised in low-cost holidays to Greece and Turkey. An estimated 50,000 holidaymakers were affected by the collapse, including around 16,000 stranded abroad.