Harry Coe, finance director of the UK's second-largest travel company, said Airtours could not shoulder the tax imposed by last week's Budget.
David Crossland, chairman, added that holidaymakers would hardly notice the extra cost, given that the pounds 5 tax is only 1.4 per cent of the average pounds 350 price for a short-haul holiday. Travellers going further afield will pay a pounds 10 levy on holidays, which typically cost pounds 500- pounds 600.
Excluding its high-street travel agencies, Airtours reaped a pre-tax profit of pounds 22.78 from each of the 2.2 million passengers carried in the year to 30 September, against pounds 21.60 in 1991/2. Yesterday, the company reported a 49.2 per cent surge in annual profits to pounds 54.5m, struck before the pounds 9m cost of the failed takeover bid earlier this year for the rival Owners Abroad group.
Leisure analysts expect profits to climb to around pounds 63m this year. The shares, 253p a year ago, closed 1p lower at 469p. The dividend is being lifted 24.1 per cent to 9p.
Airtours said there were six main reasons for the advance: strong early bookings; increased market share; higher profits from all divisions; acquisitions; a 29 per cent rise in passengers carried; and interest receivable of pounds 11.6m, up 44 per cent.
Mr Crossland said Airtours' market share in summer holidays was set to rise from 21 to 22 per cent this year, even though it had been wrong- footed when Thomson, its larger rival, launched its brochures two weeks earlier than normal in August.
'It was a good play by Thomson, but we won't be caught again.'
Airtours increased its share of the winter holiday market from 12.6 to 17 per cent. It believes its share of this year's winter sun and ski markets could exceed 19.1 per cent.
Although it failed to net Owners with a pounds 300m bid, Airtours bought Aspro Travel for pounds 20m and Hogg Robinson Leisure Travel for pounds 25m. Hogg came with 210 retail outlets to add to the 334 Pickfords Travel sites acquired the previous year.
Mr Crossland said Pickfords had 'significantly benefited' from Hogg's computer system, and all its branches would be locked into the network before Christmas.
He said the airline operations achieved very high load factors, estimated by industry observers at more than 90 per cent. Two Boeing 767s have been ordered for the long- haul market.
Cuba is the latest long-haul addition to Airtours' brochures. 'We are sending out a planeload of passengers a week,' Mr Crossland said.
Holiday Parcs has also performed well. The Bougainvilla Park leisure complex near Majorca caters for 2,000 people every night.
Roger Davies, chairman and chief executive of Thomson Travel from 1984 to 1989, is joining Airtours' board. He will also be chairman of the retail agency side.
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