The travel trade has reacted with surprise this morning following news of a merger of Thomas Cook and MyTravel.
The enlarged company will merge Thomas Cook group’s 33 tour operating brands, 2,400 travel agencies, 66 aircraft and almost 20,000 staff with MyTravel’s 17 brands, 31 aircraft and 13,000 staff worldwide.
In the UK the merged company will have 1,100 travel agencies on the high-street, currently branded Thomas Cook and Going Places. The new group, likely to merged by June subject to shareholder approval and the resolution of competition issues, will ditch the MyTravel name and will be known as the Thomas Cook Group.
The announcement comes after months of speculation of consolidation among the big four travel companies following news late last year that MyTravel was in talks with First Choice over a potential deal for its mainstream business.
Both Thomas Cook and MyTravel were understood to be bidding for First Choice’s business, with many anticipating a tie-up between Thomas Cook and First Choice and even some fevered speculation that Thomas Cook boss Manny Fontenla-Novoa’s move to run the European-wide Thomas Cook AG operation opened the way for First Choice’s Dermot Blastland to come in to run a joint UK operation.
First Choice has said it was not interested in any deal with My Travel, Thomson has ruled itself out of any potential consolidation and Thomas Cook confirmed as recently as last week that it would be part of any consolidation in the industry leaving few possible options.
Despite large scale job cuts expected, senior figures in the industry admitted news of a Thomas Cook/MyTravel merger had caught them by surprise, but said it was a positive move for the trade as it would inevitably lead to further capacity cuts and rationalisation on the high-street.
Triton Travel Group director John McEwan said: “This is a very positive development. There will be significant economies of scale. Four players were too many.”
The fact it is a shares-only deal will also mean the companies will have funds available for further investment or acquisitions, added McEwan.
Travel Weekly columnist and industry accountant Chris Photi, partner of White Hart Associates, said the news had come as a shock in the City, with First Choice shares dropping by 20% after the announcement and MyTravel’s shares jumping by 30%.
He added: “I am gob-smacked. This has been kept very quiet but I think it’s a sensible move. My feeling is we still have one too many players and if I was First Choice I would be a little bit worried today. This will also be another feather in Manny’s (Fontenla-Novoa) cap.”
A further industry observer, agreed the move would have shocked First Choice, adding: “The First Choice board must be scratching their heads this morning as even last week they were quite confident a deal was going through with Thomas Cook. What they’ll do now, I don’t know.”
The announcement comes following Fontenla-Novoa’s comments in Travel Weekly in December following his appointment as Thomas Cook AG chairman that rationalisation between the big four would have to occur.
He said: “The big four can only handle the future as they are with difficulty. If you look at recent performances, all the signs for consolidation are there but I cannot say how quickly it will happen. The vertically integrated model is still hugely profitable; everyone’s talking about the death of the package holiday but it remains profitable.”
Key questions yet to be answered include what will happen to the high-street brands and the future for competitors Thomson and First Choice.
More news and comment from the web
- Why the Thomas Cook-MyTravel merger was always going to happen – Travolution Blog
- Travel: what the analysts say – Guardian Unlimited
- Comment: Thomas Cook merger won’t cull bargain holidays – Times Online
- Comment: McHugh proves value for money – Times Online
- Thomas Cook sees no job cuts in Germany after MyTravel merger – Forbes.com
KarstadtQuelle AG press conference
- Watch an on-demand video stream of a press conference held by Thomas Cook owner KarstadtQuelle AG (load page and click ‘Speeches’).