AIRTOURS has estimated its proposed acquisition of First Choice will save the company ú35m each year by centralising operations in three key areas.
Group finance director Tim Byrne said the savings will be made through combining head office and support functions, merging the Airtours International and Air 2000 airlines and amalgamating support services for UK tour operating. Airtours admitted it will inevitably lead to redundancies but declined to predict how many jobs would go.
Savings will also be made in Canada with Airtours’ North America Leisure Group and First Choice’s Signature Vacations operation.
Byrne said half the anticipated annual cost savings would be made in the year to September 30 1999.
“We believe the enlarged group would give enormous potential for increased earnings for shareholders,” said Byrne. “First Choice shareholders can sell their stakes but we believe it is in their interests to invest in Airtours.”
First Choice shareholders will receive one Airtours share for two First Choice shares. They have been valued at 229p – a price based on the Airtours figure of 454p at the time the issue document was released.
It gives First Choice a value of ú852.1m compared to the value under the Kuoni merger of a little under ú750m. “The value could change depending on the Airtours share price,” said Byrne.
The hostile bid for First Choice, launched within days of Kuoni releasing its own offer document, has the backing of shareholders, Byrne claimed. They have 60 days to make a decision.
“The savings and synergies available through the deal far outweigh those of Kuoni,” said Byrne.