Shake-up at First Choice lifts profit
Wednesday 18 January 1995
The group, which as Owners Abroad fought off a takeover bid from Airtours in 1993, revealed that its relaunch cost of £5m and its £2m British redundancy programme, which involved 260 jobs, had been taken as a £7m exceptional charge in its 1994 results.
After the exceptionals, First Choice showed a strong taxable profits advance to £16.3m against a restated £3.4m in 1993. That was after exceptional charges of £12m.
Earnings per share of 5.1p replace losses of 1.6p a share, and the dividend is hoisted from 3.50p to to 3.85p.
Francis Baron, who came on board as chief executive in November 1993 after previous executive directors left following a profits warning, said the result was creditable given the restructuring of the company and the difficulties surrounding the summer 1994 programme.
He said the rebranding of the group had helped increase bookings by 35 per cent. This compared with just 5 per cent growth in the market as a whole. As part of its rebranding, eight former brand names were reconstructed as three, and 34 summer brochures were reduced to 17.
Mr Baron also said there was no evidence of price-cutting among holiday tour operators for summer 1995 holidays in the crucial January and February booking period.
"It was a bit slow initially because of the way the Christmas break fell, but now it is picking up nicely." First Choice says it has 15 per cent of the summer holiday market compared with 9 per cent in December 1993.
The group says its cumulative share of the market is up 2 per cent on a year ago. "I believe we are well placed to achieve our objective, stated at the time of our relaunch, to achieve a minimum improvement of 1 per cent in our market share for summer 1995," Mr Baron said.
The number of passengers carried by the group in 1994 was 3.6 million, an increase of 15 per cent. Air 2000 underpinned its position as the third-biggest British airline, boosting capacity by 5.4 per cent, and increasing the number of passengers carried to nearly 3 million.
First Choice has also pulled out of seat broking, which is basically the making of a market in airline seats. Mr Baron said: "We wanted to focus on our main business. We are not seat traders, we are specialist mass market tour operators."
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