The Investment Column: Airtours loss can bring gain

IT WOULD probably be better if Airtours didn't report interim profits at all. In a business which is so seasonal that all its profits are made in a few months in the second half of the year, the travel group's first-half figures are usually meaningless. But that doesn't stop the market from scrutinising them for signs of what is to come.

So when Airtours reported yesterday that pre-tax losses in the six months to March had almost doubled to pounds 23.2m, its shares promptly lost 7 per cent of their value, crashing 35p to 486.5p.

What rattled investors was Airtours' admission that its Scandinavian operations had lost pounds 7.7m, largely because the group was forced to spend pounds 8m trying to end delays at its Premiair subsidiary.

Investments in Finland and Poland, where Airtours is starting a new business from scratch, also contributed to the shortfall.

In spite of this, Airtours reckons other parts of the business will make up the difference, and analysts' full-year profit forecasts have remained largely unchanged at around pounds 139m.

Demand in the United Kingdom is robust, and Airtours is making good progress in other European markets, including Germany.

Looking ahead, the company should continue to pursue its strategy of developing a global travel business. A big acquisition in the United States would help that cause no end, and its chief executive, David Crossland, does not rule out issuing shares to pay for a deal if it comes off.

On a forward PE ratio of 21 the shares trade roughly in line with the recently floated Thomson Travel Group.

What's more, they offer private shareholders similar discounts on holidays to the ones trumpeted by Thomson - without the same amount of hassle. Yesterday's fall represents a good buying opportunity.

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