Clouds dim prospects for Thomson Travel

THOMSON TRAVEL Group, Britain's largest package holiday company, which came to the market last year, yesterday pledged to fight to hold its position as speculation increased that third-placed First Choice Holidays will fall to a bid. Airtours and Preussag, the dominant shareholder in Thomas Cook, are the most likely buyers.

Thomson holds 29 per cent of the UK market for holidays booked through travel agents, ahead of Airtours with 17 per cent and First Choice and Thomas Cook with 16 per cent.

The company said it expected to play "a key role" in the consolidation sweeping the holidays industry in Europe. After seven acquisitions since the float, it is looking for bolt-on deals in Europe, especially in Germany and the Benelux countries.

The comments came as Thomson reported a 10 per cent rise in full-year profits to pounds 122.9m. However, Thomson shares fell 10.5p to 161p, below the 170p issue price last May, on a disappointing trading update.

Thomson's bookings for summer this year are 2 per cent lower than the period last year. This is better than the industry average of a 3 per cent fall, but it contrasts with a 5 per cent rise announced by Airtours.

Thomson has proved a disappointing investment for the 500,000 small investors who subscribed. They should be encouraged that capacity has been cut by 3 per cent this summer, reducing the danger of a glut of discounted holidays.

Thomson is expanding outside the UK - it now operates in eight countries - and developing its higher margin specialist holidays with purchases such as the Simply Travel/ Headwater business. It is also growing its travel agency chain, with yesterday's pounds 3.5m acquisition of the Robert Sibbald network in Scotland taking its total high-street portfolio to 840.

But there are clouds on the horizon. One is the prospect of Airtours exploiting its strength with more capacity. Another is the uncertainty over First Choice and the possibility of an aggressive overseas operator invading the UK market.

On current-year forecasts of pounds 137m, the shares trade on a forward rating of 16. Merrill Lynch says that is high enough for now.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'