Like so many package tour operators it booked too many holidays and the industry was littered with a million unsold packages. This year the highly hyped package tours business cut capacity with Airtours stripping its programme by up to 15 per cent.
The policy has paid off. With demand more in line with capacity the group has been able to cash in by lifting the price of its remaining summer holidays by up to pounds 30. Said marketing director Richard Carrick: "We warned that there would be a shortage of holidays and that is the situation we are in now."
There has been gathering evidence that Airtours had assimilated the lessons of last year's unhappiness. Profits for the three months to end- June were up 47 per cent and City expectations for the year ending next month have been lifted to around pounds 80m with pounds 100m pencilled in for next year.
Following a link early this year Airtours is takeover-proof - unless its new US partner, Carnival Cruise Corporation, agrees to any deal. Carnival paid 500p a share for a 30 per cent stake in the UK's second-largest tour operator. There has been talk of a full merger with Carnival particularly interested in Airtour's fledgling cruise operations.
Airtours remains acquisitive and has just paid nearly pounds 10m for a Canadian travel firm. Two years ago it launched an abortive bid for First Choice, the third-ranking holiday group. It was frustrated by German-owned Thomas Cook and the UBS fund management group.
Although there is little chance Airtours will return to First Choice, summer-time takeover rumours are buzzing around. A Canadian group is favourite to pounce. Despite the crescendo of speculation First Choice, the old Owners Abroad, managed just a 2p gain to 67p against a 92p year's high.
For months, Thomas Cook has been looking to unload its remaining 14 per cent stake in First Choice; it signalled its disenchantment when it failed to take up its share of last year's pounds 44.1m rights issue.
The rest of the market made a further move towards its peak with Footsie notching a 6.9 points gain to 3,830.3. The supporting FT-SE 250 index held on the uproad for the eleventh consecutive session.
Great Universal Stores, the cash-rich mail order and high street retailing group, added 10p to 631p. It is something of a sleeping giant. But the pending arrival as chairman of Lord Wolfson of Sunningdale (replacing Lord Wolfson of Marylebone) is expected to lead to an extensive revamping which, besides acquisitions, could embrace a share buy-back or a more shareholder friendly special dividend.
Grand Metropolitan, ahead of an investment presentation to institutions, slipped 3p to 455p. Cookson, off 7p at 250p, continued its bid to assume leadership of the conglomerate retreat. The NatWest Securities caution was the prime influence.
In an active media sector Pearson gained 7p to 675p with break-up valuations exciting interest and on the banking pitch merchant bank Singer & Friedlander added 3.5p to 119.5p despite denying reports it had put itself up for sale. Schroders had the dubious distinction of reclaiming the banking takeover prize; its ordinary shares rose 20p to 1,348p and the non-voting 40p to 1,040p.
BICC, the cable and construction group, gained 5p to 320p with a confident trading statement reducing the impact of the surprise interim loss. RTZ managed a 16p advance to 955p on the firmer copper price.
J Sainsbury shaded to 404p as NatWest described the shares as a trading sell; British Biotech lost 3p to 201p (after 192p) still reflecting the Credit Lyonnais Laing caution.
Builder Bellway celebrated its inclusion in the FT-SE 250 index with a 12p gain to 319p.
In a dull electricity sector East Midlands Electricity reflected fading bid hopes, down 10p to 579p but National Grid managed a modest 2.5p recovery to 167.5p.
Barbican Healthcare, the latest AIM recruit, stretched to 68p from its 62p placing level. Capital & Western Estates, suspended at 2.5p, is undertaking two reverse deals. It is buying Global Internet for pounds 6.2m in a share offer and in cash and shares bidding pounds 8m for Ballynatray.
Nigel Wray, , the ubiquitous investor whose interests include leisure, property and rugby, has emerged as a 13 per cent shareholder in London & Edinburgh Publishing which should arrive on AIM today. The group produces commemorative books and brochures. The issue has been scaled down but there are hopes L&E could achieve a premium of, say, 3p to the 10p placing price.
The company comes with a pounds 400,000 profit forecast for this year and intends to pay a 0.25p dividend. Mr Wray's other publishing interests include Columbus, a business directory group which came to market via a reverse takeover.
r Bolton International plas a joint venture manufacturing investment in China; the shares rose 1p to 17p.