Investment Column: Airtours spreads wings abroad

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The Independent Online
This should be a sunny summer for Airtours, the UK's second-largest tour operator. With consumers spending building society windfalls in advance, the average Brit is spending more on holidays and taking more of them. Airtours' 1997 UK summer bookings are ahead 29 per cent with winter bookings up by almost half. And there are no signs of the price wars that crippled the industry two years ago. Airtours' chairman, David Crossland, says the group held its UK market share at around 18 per cent last year. With fewer holidays on offer here, last-minute cut-price deals are scarce and are being offered at less breathtaking discounts.

With more breathing space at home, Airtours is wisely concentrating on expanding its empire overseas. Last year over half its pounds 818m sales came from outside the UK compared with only a tiny proportion three years ago. Spreading its geographical wings has been an excellent strategy. With Airtours, Thompson and First Choice already accounting for over 60 per cent of the UK tour market, there is little more to do here. Not so in Airtours' newer territories. A big contributor to the group's dramatic 45 per cent reduction in losses to pounds 12.7m in the half-year to March was a move to profit in Scandanavia as acquisitions were turned around.

Mr Crossland wants another country in Europe - Germany looks a possibility. The potential to grow in North America look even greater.

Airtours is also diversifying fast from bog-standard tour packages to time share and counter-seasonal businesses like cruises.

Analysts have upgraded full-year forecasts by around pounds 5m to pounds 120m, putting the group on a rating of around 17 times, with the shares up 30p at 974.5p, a chunky premium to the market. The near-tripling in the share price over 12 months has been on hopes that 29.6 per cent shareholder Carnival will swoop. That might happen when Mr Crossland retires, but at 49, he looks as vital as ever. A good company, but the shares are a hold.