Buoyant MyTravel eyes up targets

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The Independent Online

MyTravel warned it was unlikely to hit its margin target next year as it reported its first annual profit in five years.

The tour operator, which is keen to buy First Choice's package holiday division, disclosed it was also eyeing a number of other potential acquisition targets should it be pipped to the post by a rival such as Thomas Cook.

Other options open to MyTravel, which has been transformed since Peter McHugh took the helm in the wake of an accounting scandal, include building up a domestic travel business and expanding into new markets such as the Baltic states and the US.

In a sign of how mainstream environmental concerns have now become, MyTravel said it saw potential in turning its focus to the UK market for the first time. The company is also keen to build up a cruise arm and to offer more offbeat holidays for customers.

Mr McHugh reiterated that the company's top choice would be to acquire First Choice's package holiday arm. MyTravel said it was prepared to offer First Choice shareholders an equity alternative to cash. Analysts believe it would have to pay up to £600m for First Choice's business.

Tough trading in the wake of August's airport scare and July's hot weather forced a profit warning from the company. But this did not stop it climbing back into the black for the year to 31 October, which saw pre-tax profits rise to £43.8m against £17.4m of losses the previous year. This masked a worse performance from its main UK business, which made a £12.9m loss, down from £27.4m the previous year. Group figures were boosted by cost cuts of £66.8m