| Journal: TWUK | Section: |
| Title: | Issue Date: 17/07/00 |
| Author: | Page Number: 8 |
| Copyright: Other |
Comment
Germans set to profit from Airtours’ tumble
The halo has slipped and the golden boys have lost their Midas touch. Airtours, that solid performer in recent years, has announced a profits warning because its operations in various countries are not performing as well as expected.Sift through all the rhetoric and what’s the real reason for this?In many markets it’s the old chestnut of too much capacity.
In Germany, Airtours has completed the purchase of FTi, which has been haemorrhaging money. As theoperator admits “the level of tour operator capacity is unsustainable”. In Belgium, Holland and France, lower selling prices and higher levels of discounting reflectdifficult market conditions.
The only bright spot seems to be the UK. But the real test will be in the peak season and Airtours has significantly added capacity. If the gamble doesn’t come off, profits could be even lower than currently predicted.
Airtours, which has prided itself on profits, not market share, is obsessed with growth and is paying the penalty. Much of this may be due to market conditions but doesn’t it remind you of what happened to Thomson? Talking of which, this makes the possibility of a takeover of Airtours even more likely. German giant C&N must be rubbing its hands as it watches the share price tumble.
It won’t be long before the UKindustry is controlled by the Germans.
Jeremy Skidmore – editor