After aborted mergers, First Choice casts it eye on Europe
Peter Long, the company's chief executive, said: "We are poised to take part in the consolidation in the European travel industry. We see a number of opportunities that should come to fruition next year."
In September, First Choice escaped a hostile bid from its rival, Airtours, when it was blocked by the European Commission. Its own friendly merger with Kuoni Reisen Holding, the Swiss travel company, was scuppered by the Airtours bid. First Choice's full-year results, which were announced yesterday, showed a pounds 6.2m charge for the aborted Kuoni merger and the defence against Airtours.
The group reported operating profits before exceptional items and goodwill of pounds 63.5m for the year to 31 October. Pre-tax profits fell 6.2 per cent to pounds 46.9m, dragged down by one-off charges related to the abortive merger deals, a pounds 7.3m loss at the company's Canadian Signature Vacations business and the pounds 7.4m cost of rolling out the group's retail capability.
First Choice expects to spend pounds 60m over the next three years building a retail network to compete with larger domestic rivals. By the end of the year, the company will operate 607 shops compared with 199 in 1998. The group yesterday announced it would pay pounds 45m in cash and shares to increase its stake in its Holiday Hypermarkets joint venture from 25 per cent to 100 per cent. The 21 stores offer travel advice, booking services and virtual-reality games.
Mr Long said he also saw big opportunities in Internet technology, in particular in linking the group's Internet capabilities with those of interactive, pay-TV operators. First Choice has already signed deals with Telewest and NTL, the cable companies, for projects that will come on line in mid-2000.
Mr Long said: "We are not just going to sit there while the start-ups come into the market. We will actively participate."
The group warned that bookings for the millennium were "not as good as any of us had anticipated" and that many of the group's holidays over the period were being sold at a discount of 15 per cent. But he said prospects for 2000 were good and long-haul bookings for the year as a whole were up 31 per cent, with Florida and Mexico the most popular destinations. He said the group would also continue to build its strength in the UK market, with bookings made in the UK and Ireland currently running 13 per cent ahead of last year on a like-for-like basis.
First Choice shares closed up 4.5p at 137.5p yesterday.
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