Most people in the industry – except First Choice – are coming round to the idea that Airtours’ bid for the company is likely to succeed. At first there was much talk of the deal being blocked by Europe and/or the Government, but this now seems unlikely.
Even Thomson’s contingency planning suggests that it has now reluctantly had to accept the situation. The question is what will Airtours do with First Choice?
In recent times, Airtours has left its acquisitions to their own devices. Steve Kimber at Cresta still runs the short-break operator – provided he delivers the profits.
But First Choice is different because of its size and because it is in the same market as Airtours. It is also different because Airtours has pledged to make £35m of cost savings after the purchase.
Savings can be made in combining the two airlines and in the huge buying power the group will have, but I also expect there will be changes in the tour operation.
The First Choice name will stay because the group needs to offer customers choice, but some senior management will go and there will be a huge temptation to consolidate in many areas of operation. The group is bound to lose some share because it is hard to hold more than 30% in the mass market. Airtours needs to be careful it doesn’t pay a hefty price for First Choice and then cut costs so much that the company is scaled right back.
Jeremy Skidmore – editor