THE CITY is expecting that Airtours' planned bid for rival First Choice will collapse today as the deadline arrives for the UK holiday company to present its revised proposals for the deal to the European Commission.
The concessions to be offered by Airtours are expected to include guaranteed places for independents on the enlarged group's chartered airlines and the disposal of several First Choice business, including Unijet, the airline operator First Choice bought for pounds 110m last July.
But analysts say the Commission will accept nothing less than the creation of a fourth UK operator to resolve competition issues. This would mean Airtours selling such a large chunk of the assets it hopes to acquire, perhaps including First Choice's main airline arm, Air 2000, that the takeover would become economically unfeasible. One said: "If that is what Airtours needs to do to placate the Commission, it torpedoes the economics of the acquisition." First Choice shareholders, who earlier this year rejected an approach from Kuoni, the Swiss firm, would be unlikely to accept such a deal.
It is understood Airtours has already offered to sell two First Choice businesses: Viking Aviation, the aircraft-seat broking arm of Unijet, and Eclipse, which sells holidays over the phone. But the Commission is said to have requested further disposals.
A sale of Unijet would shave pounds 10m to pounds 15m off the pounds 35m of cost-savings Airtours hoped to generate from its link-up with First Choice. One analyst also raised doubts about selling Unijet as a separate unit, as it has been integrated with Air 2000 by First Choice.
Tim Byrne, Airtours' finance director refused to comment yesterday on the possible terms of its proposed bid, but said if an agreement was reached with the Commission, the company would then have 21 days to make a second offer to First Choice.
Meanwhile, First Choice yesterday named Peter Long, the company's managing director, as its new chief executive. The restructuring also includes the appointment of Dermot Blastland to the board as managing director of UK and Ireland tour operations and the planned shifting of chairman Ian Clubb to a non-executive role.
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