Airtours buys up Italian cruise operator for pounds 181m

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The Independent Online
The rise and rise of Airtours continued yesterday after the tour operator, Britain's second-largest after Thomson, announced a further move into the booming cruise market with the acquisition of Europe's largest cruise company, Italy's Costa Crociere. Airtours' shares jumped 50p to 797.5p on the news, at which level they have more than doubled since the beginning of the year.

The pounds 181m deal, agreed by Costa's controlling shareholders, was struck in joint partnership with Airtours' largest shareholder, Carnival Corporation, the largest US cruise operator. Both companies plan to contribute half the consideration from their own resources.

It is the first time Carnival and Airtours have acted in concert like this since Carnival took a 29.5 per cent stake in the British holiday company and the deal is certain to intensify speculation that the two will eventually merge. David Crossland, founder and chairman of Airtours, is already on the board of Carnival.

Airtours and Carnival said yesterday they had entered into an agreement with a syndicate of shareholders owning just over 50 per cent of Costa's Milan-traded shares. That syndicate's biggest shareholder is the Costa family itself, while other members include hotel and leisure group Accor, the Agnelli family which controls Fiat, and supermarket group Chargeurs.

Costa, which is based in Genoa, operates 10 ships, primarily in the Mediterranean, where it controls 30 per cent of the cruise market. It is strong in Italy, where it sells 70 per cent of all cruises on the Mediterranean, and in France, where its share is 40 per cent.

In the year to December 1995, it is estimated that about 900,000 cruises were taken in the Mediterranean and northern Europe out of a world-wide total of 5.4 million. The cruise market in Europe is expected to grow to 1.2 million cruise passengers by the year 2000.

Last year, Costa made profits before tax and extraordinary items of pounds 18.2m from sales of pounds 380m. The company will be run as a stand-alone business, headquartered in Genoa, but Airtours expects to supply its cruise ships through its own tour operation and to stock its brochures in its Going Places travel agencies.

The Costa deal follows hot on the heels of bumper full-year figures from Airtours last week for the 12 months to September. Profits rose 46 per cent to pounds 86.8m after a 30 per cent rise in sales to pounds 1.7bn. That compared with profits earlier this week from rival First Choice of pounds 10m from sales of pounds 1bn.

Airtours indicated at the time of its results that it was planning to spend up to pounds 250m on overseas acquisitions to push its profits from outside Britain to 50 per cent of the group total.