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Europe’s second and third largest package holiday groups, Thomas Cook and MyTravel, have agreed to combine in an estimated GBP2.9bn all-share deal after years of struggling against the explosive growth of low-cost airlines and do-it-yourself internet holidays.
The proposed merger, which must win the backing of competition regulators, is likely to lead to widespread closures of high street travel agents as well as job losses, particularly in the UK. The enlarged business has promised investors annual cost savings of GBP75m.
The two companies insist the merger will not hand them unhealthy market dominance. They point to rapid growth in the number of British holidaymakers who chose to book their own bespoke European short-haul breaks over the internet, particularly through low-cost airlines. The number has almost doubled in eight years to 27.4 million last year.
The merged group will be 52% owned by Thomas Cook’s owner, German retailer KarstadtQuelle. It intends to remain a long-term shareholder. Listed on the London stock exchange, the company will be renamed Thomas Cook plc - a name that can be traced back to the group’s Derbyshire-born founder, who set the business up in 1841.
MyTravel chief executive Peter McHugh confirmed UK shop closures were likely but insisted efforts would be made to relocate some staff. “People are our primary asset,” he said.
MyTravel, which owns brands such as Airtours, Going Places and Aspro Holidays, has 456 travel agent shops in Britain and Thomas Cook, which includes Condor and Club 18-30, has 574 shops. Almost 60% of the enlarged group’s 33,000 staff will be in the UK, which is expected to generate just 40% of sales. |
