Owners Abroad's victory in bid battle cost 5m pounds: Cost-cutting programme includes company-wide pay freeze

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The Independent Online
OWNERS ABROAD, the travel group, spent pounds 5m defending itself against the unsuccessful pounds 289m bid from Airtours, which failed on Budget day.

The figure, which emerged following meetings with stock market analysts last week, is half the amount spent by Airtours, but will still make a significant dent in pre-tax profits this year.

A large proportion of the money went to Owners' merchant banking advisers, Samuel Montagu, but there were also large payments to lawyers and accountants working on the details of the group's strategic alliance with Thomas Cook, a significant factor in its success.

Owners has also instituted a drastic cost-cutting regime in order to bring about the pounds 7m of savings it promised investors while defending the Airtours bid. Among the measures was a company-wide pay freeze, which is believed to have included the cancellation of various performance payments allowed for in the contracts of employees.

Howard Klein, Owners' chairman, said the pay freeze was in line with the rationalisation caused by the hard times facing the package holidays industry. 'Our employees understand what we have done,' he said. 'It has meant we have avoided having to make redundancies and our employees are only too glad they are not working for Airtours.'

In addition to the pounds 7m of cost savings promised by Owners in the current financial year, it has said that its strategic alliance with Thomas Cook, the travel company owned by the German group LTU, would bring pounds 9m of savings in the next financial year and pounds 11m the following year.

Owners' meetings with analysts are likely to lead to a number of them reducing profits forcecasts. Currently the range spreads from pounds 32m to pounds 42m.