Thomas Cook and MyTravel are to merge in a move which brings the number of major industry players down from four to three.
After several months of speculation surrounding consolidation amongst the big four, the two companies announced they would join to create one new company generating annual pre-tax profits of at least £75 million.
It was expected the two companies would be battling to purchase First Choice, after it announced it would listen to offers for its mainstream business. The combined company will be called the Thomas Cook Group, based in the UK and listed on the London Stock Exchange.
However, the new company has not announced any decision on the branding of its enlarged operations.
Peter McHugh, chief executive of MyTravel, and Manny Fontenla-Novoa, chief executive of the Thomas Cook Group will run the company as joint chief executives until McHugh leaves at the end of the year.
McHugh will focus on integration and synergy planning, finance and investor relations. Fontenla-Nova will focus on managing the business, group strategy, marketing, budgeting and group human resources.
MyTravel head of UK John Bloodworth takes responsibility for the UK division of the enlarged company, with Thomas Cook chief financial officer Ludger Heuberg taking the role of finance director.
The combined company has around 11,000 high street shops, although consolidation of the retail estate is expected as it will have two shops on many high streets. Thomas Cook parent KarstadtQuelle will own 52% of the new company while MyTravel shareholders will have a 48% stake.
The merger is subject to approval from the anti-trust authorities and MyTravel shareholders as well as the completion of the recently announced Lufthansa deal.
MyTravel took 5.5 million passengers on holiday in 2005/6 and employed nearly 13,000 staff worldwide. It reported sales of £2,797 million with profits of £88 million, for the 12 months to October 31, 2006. The Thomas Cook group recorded sales of 7,780 Euros with earnings of 385 million Euros.
Thomas Cook UK reported sales of 2,483 Euros for the 12 months to October 31, 2006, with the company making an industry-leading margin of 5.1%.
MyTravel UK’s summer 2006 trading has accelerated in the first six weeks of the year with booking only 6% down on last year compared to 11% in December. The company had sold 40% of its capacity by 4 February 2007, which is the same as last year. Selling prices are flat.
In Northern Europe, bookings are down 2.8% compared to last year with 29% of its capacity sold. Prices have increased by 3.5%.
Thomas Cook UK winter 2006/7 is up by 6% with average selling prices up 3% compared to last year. For the summer 40% of its UK capacity has been sold, with 33% in continental Europe.
UK passenger numbers are at similar levels with prices up by 1%.