INDEPENDENT agent consortia have attacked Thomson’s plan to flood the market and create a price war.
ARTAC Worldchoice, Advantage and Midconsort have all expressed disbelief that Thomson is willing to destabilise the market to hold on to its number-one position following Airtours’ £852 million hostile bid for First Choice.
ARTAC Worldchoice chairman Colin Heal said: “It will create dangers within the industry as a whole. It’s a situation from which hardly anyone will gain, not even Thomson. It’s just going to destabiliseeverything.”
Advantage commercial director Neil Armorgie said: “The Thomson announcement is a very strange thing to do. I could more imagine it doing this four or five years before they floated, but now it has a responsibility to the City. We’ve had relative stability in the market in the last few years and retailers and tour operators have seemed to be making money. This will stop all that.”
Midconsort’s chief executive Sue Foxall said: “Thomson is being very silly. It went along the right lines with loading late deals with extra costs. That was going to give us a lot more commission and greater margins for us all but now it has gone and counteracted that with these cheaper holidays. It just doesn’t follow logic. The saying ‘profit is sanity, market share is vanity’ rings true here.”
Armorgie added that rumours that Thomson has said it will not sell First Choice holidays through Lunn Poly if the Airtours bid goes through would be highly destructive.
“There would be a stand-off. Going Places might then say it won’t sell Crystal and the situation would go on and on and there would be serious ramifications.”
Advantage and ARTAC Worldchoice believe the success of the Airtours bid would be a positive step forward but Midconsort is unhappy.
“Unlike the other consortia, we are truly independent so we would rather First Choice was a separate player because that gives the consumer more choice and us more choice on what to sell them.”
nSee Analysis and Comment, page 6; and Columnists, page 11
THOMSON’S determination to retain its number-one spot in the market by pumping up capacity is disastrous for its shareholders but good news for holidaymakers, according to industry observers.
They say cheap holidays will delight UK travellers but spell plummeting share prices and an uncertain future for the industry which has only recently settled into a period of relativestability.
Midconsort chief executive Sue Foxall said: “It won’t do anyone any good except the consumer and why should they get more benefits? They get enough out of us as it is.”
A City analyst said: “Thomson really is not behaving very rationally at the moment and is now under enormous pressure from shareholders. This is the first time it has been under such pressure because before it floated it didn’t have the City to answer to. Maybe that will make Thomson calm down a bit because the shareholders really are hopping mad at the moment.”
Advantage commercial director Neil Armorgie added: “If Thomson floods the market, the consumer is the only one who will win.”
CITY analysts think it is unlikely Thomson will put in a bid for First Choice to rival Airtours’ because it has depreciated its own stock too much since announcing its plans to flood the market this summer.
Thomson chief executive Paul Brett has been criticised for precipitating a price war and causing a 20% drop in the company’s stock value. Brett expressed his views to the City in some hastily arranged meetings (see front page).
One analyst said: “Thomson making a bid would be a ridiculous notion because it has said too publicly it would be bad for the industry. Its share price is so low it would be very expensive for it to make a bid anyway. It would have to issue more shares to do it and the City just wouldn’t have that.”
Another added: “It would be a total waste of money for Thomson to make a bid because it would get referred on competition grounds. I suppose if it wanted the whole Airtours thing to go to the Competition Commission that would be the way to do it. If Thomson did it, it would be seen as a spoiling tactic straight away. Thomson shares are so low it couldn’t afford to do it in reality.”
But there is a feeling that Brett will retain his seat on the board, despite the furore amongst shareholders.
“Shareholders don’t have much confidence in the board but you have to stir up a lot of people to get things achieved, including getting rid of Brett,” said one analyst.
Another City watcher said: “If Thomson’s share price stays below 170p, then Brett’s got problems but it may recover and that would be a lifeline. Anyway, who knows, Brett could yet be proved right.”
Meanwhile, Airtours is also seeing City investors to try to convince them of the merits of its £852m bid for First Choice.
CITY analysts think it is unlikely Thomson will put in a bid for First Choice to rival Airtours’ because it has depreciated its own stock too much since announcing its plans to flood the market this summer.
Thomson chief executive Paul Brett has been criticised for precipitating a price war and causing a 20% drop in the company’s stock value. Brett expressed his views to the City in some hastily arranged meetings (see front page).
One analyst said: “Thomson making a bid would be a ridiculous notion because it has said too publicly it would be bad for the industry. Its share price is so low it would be very expensive for it to make a bid anyway. It would have to issue more shares to do it and the City just wouldn’t have that.”
Another added: “It would be a total waste of money for Thomson to make a bid because it would get referred on competition grounds. I suppose if it wanted the whole Airtours thing to go to the Competition Commission that would be the way to do it. If Thomson did it, it would be seen as a spoiling tactic straight away. Thomson shares are so low it couldn’t afford to do it in reality.”
But there is a feeling that Brett will retain his seat on the board, despite the furore amongst shareholders.
“Shareholders don’t have much confidence in the board but you have to stir up a lot of people to get things achieved, including getting rid of Brett,” said one analyst.
Another City watcher said: “If Thomson’s share price stays below 170p, then Brett’s got problems but it may recover and that would be a lifeline. Anyway, who knows, Brett could yet be proved right.”
Meanwhile, Airtours is also seeing City investors to try to convince them of the merits of its £852m bid for First Choice.
CITY analysts think it is unlikely Thomson will put in a bid for First Choice to rival Airtours’ because it has depreciated its own stock too much since announcing its plans to flood the market this summer.
Thomson chief executive Paul Brett has been criticised for precipitating a price war and causing a 20% drop in the company’s stock value. Brett expressed his views to the City in some hastily arranged meetings (see front page).
One analyst said: “Thomson making a bid would be a ridiculous notion because it has said too publicly it would be bad for the industry. Its share price is so low it would be very expensive for it to make a bid anyway. It would have to issue more shares to do it and the City just wouldn’t have that.”
Another added: “It would be a total waste of money for Thomson to make a bid because it would get referred on competition grounds. I suppose if it wanted the whole Airtours thing to go to the Competition Commission that would be the way to do it. If Thomson did it, it would be seen as a spoiling tactic straight away. Thomson shares are so low it couldn’t afford to do it in reality.”
But there is a feeling that Brett will retain his seat on the board, despite the furore amongst shareholders.
“Shareholders don’t have much confidence in the board but you have to stir up a lot of people to get things achieved, including getting rid of Brett,” said one analyst.
Another City watcher said: “If Thomson’s share price stays below 170p, then Brett’s got problems but it may recover and that would be a lifeline. Anyway, who knows, Brett could yet be proved right.”
Meanwhile, Airtours is also seeing City investors to try to convince them of the merits of its £852m bid for First Choice.