Airtours buys Pickfords travel agency chain

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The Independent Online
AIRTOURS has become only the second fully vertically integrated holiday company in the UK, by finally buying the Pickfords Travel chain of travel agents from NFC for pounds 16m cash.

This is Airtours' second attempt to buy Pickfords, which is no longer a core business as NFC is now concentrating on bolstering its haulage operations.

The original negotiations collapsed last Christmas for undisclosed reasons, but resumed three weeks ago amid rumours that Vic Fatah, the businessman, was interested in Pickfords.

Pickfords will join a group that has its own airline and tour operations. It will rank second to Thomson, owner of Britannia Airways, Thomson Holidays, and Lunn Poly travel agencies.

Accounts for the 48 weeks to 5 September show that Pickfords made pounds 2.9m before profit-sharing, tax and extraordinary items, on commissions of pounds 51.5m earned on pounds 387m of sales.

The purchase of Pickfords is the latest in a string of consolidation moves by the big holiday operators since the devastating price wars in the late eighties.

Greater control over the market has enabled the industry, which in 1989 saw 30 companies turn over pounds 2.8bn but lose pounds 25m, to return to profit.

That has been achieved mainly by cutting capacity from 12 million holidays in 1989 to less than 10 million this year.

The big three companies, which also include Owners Abroad, account for 60 per cent of the package holiday market. Half of the retail end of the market is governed by six multiples, which own one third of the UK's 6,800 travel agency outlets.

Analysts said the main benefits for Airtours were that it would now be able to retail its holiday packages directly through Pickfords' 333 high-street outlets, and reap holiday insurance commissions.

David Crossland, Airtours' chairman, said: 'One extra booking per week for an Airtours holiday in each Pickfords branch adds pounds 2m to profits in a year. Even if we left Pickfords alone, it would enhance earnings.'

Airtours shares gained 10p to 223p yesterday, with several analysts upgrading profit forecasts for 1992/3 from around pounds 40m to pounds 42m.

Airtours said it was keen to enhance Pickfords' geographical coverage, largely tilted towards the south, probably through the purchase of independent multiple operators. In terms of outlets, Pickfords is marginally smaller than Thomas Cook, and two thirds the size of Lunn Poly.