Fall in long-haul sales grounds ebookers

Ebookers lost more than one-third of its market value yesterday after the travel company admitted demand for long-haul flights had collapsed in June.

Ebookers lost more than one-third of its market value yesterday after the travel company admitted demand for long-haul flights had collapsed in June.

The group, which specialises in providing bookings for flights to the Far East and North America, warned that its adjusted full-year performance would be "significantly" worse than expected. The shortfall reflected its decision to beef up its online operations after concluding there was no future in its traditional shops.

Shares in the group crashed 36 per cent to 140p, wiping more than £50m off its market capitalisation. Just 12 months ago, ebookers' shares traded at 626p. Fears about how the slump in demand for flights might have affected lastminute.com knocked shares in the rival retailer by 10 per cent to 146p.

Ebookers said its offline sales from its 12 remaining shops across Europe had fallen by 14 per cent in the second quarter, while underlying sales across the group rose by 28 per cent, reflecting a 62 per cent increase in its total online sales.

The group, which appointed a new finance director, Michael Healey, two months ago, said "demand and margins are now forecast to be lower than originally expected". It still expects its net losses to be "substantially" less than the £15m it racked up last year.

The group's house broker, Evolution Beeson Gregory, slashed its adjusted profit forecast to £2m. Previously the market had predicted adjusted profits of £10.3m to £15m.

The company has spent 2004 withdrawing from the high street. It has sold nine stores across Europe and has not ruled out further disposals. It is also cutting 270 jobs.

Dinesh Dhamija, the chief executive, said: "We are reinforcing the continuing high growth of the online business with significant incremental investment in technology and other support, and managing a phased transition from our less profitable low-growth offline businesses."

Earlier this year the group's preliminary profits missed market expectations on the back of weak demand for higher-margin car and hotel booking services.