Airtours to limit holiday deals

AIRTOURS, Britain's second biggest charter operation, will cut the number of cheap holiday deals next summer in spite of increased profits and a surge in bookings.

The pounds 1.8bn company has benefited from Britain's rain-soaked summer, which has led to an 8 per cent rise in holiday bookings and a 16 per cent jump in bookings for this winter and next season.

But the group is under pressure. Pre-tax profits for the quarter to 30 June of pounds 24.6m are only fractionally higher than the pounds 24m recorded last year.

Airtours will not follow the travel trade tradition of flooding the market with holidays only to have to sell them dirt cheap at the last minute. Instead Airtours is cutting the number of charter packages on offer next year.

"After growth in the charter market of 10 per cent and 8 per cent over the last two years, it is important that the industry resists the temptation to increase supply for a third consecutive years to a level below that of the current season in order maximise profitability," said chairman David Crossland.

Nine-month profits plummeted from pounds 11.4m to pounds 1.4m, hit by a one-off problem in Scandinavia and exacerbated by overcapacity and investment in Finland and Poland.

Mr Crossland said that the there would be a "substantial reduction in the total capacity to the Scandinavian market which should have a significant positive effect upon margins."

Airtours is a major operator in Scandinavia following its acquisition of the Scandinavian Leisure Group in 1994 and the area now accounts for nearly 40 per cent of the company's revenue.

Britain remains Airtours' key market. The group derived pounds 408m of its third-quarter total sales of pounds 735m from this area.

Analysts say the British holiday market is undergoing a "mini-boom" at present. Last month, Airtours sent a letter to its agents asking them to maximise their "mutual earning potential".

The move will see sunseekers less likely to be able to snap up "last- minute" bargains as in previous years.

The firm has increased the prices of all Airtours Summer Sun, Greece, Turkey, All Inclusive and Aspro Summer Sun brochure holidays with immediate effect.

It will see an average pounds 20 increase on the cost of a seven-night holiday.

"Airtours have been a poor performer for some time -simply because there was too much supply and not enough demand.

"That is now changing," said one analyst.