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U.K. travel firms sell off
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September 10, 1999: 8:26 a.m. ET
Thomson warns on profit; Airtours- First Choice tie may be blocked
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LONDON (CNNfn) - Shares in three of Britain's largest travel companies tumbled Friday after one issued a profit warning and a planned merger between two others was hit by regulatory uncertainty.
Thomson Travel, the largest package holiday operator, issued its second profit warning in a turbulent six weeks that has also seen its chief executive resign.
Thomson Travel (TRV) shares slumped 17.2 percent to a record low of 105 pence. The company was floated by Canada's Thomson Corp. in May 1998 at 170 pence a share.
The downbeat news for investors in the sector continued with a 12 percent fall in shares of First Choice, the number-four operator. This followed reports that European competition officials were set to block a revived takeover bid by the U.K. number-two, Airtours.
Airtours' bid was referred in June to the European Commission in Brussels, the executive arm of the 15-nation European Union. The company was reported by Reuters to have offered a series of concessions to allay fears that its contested bid, vaulting it into Britain's top spot, would give control of the tour operator business to a limited number of companies.
The Commission is due to report its findings on Sept. 22, and officials declined to comment on the outcome of talks with Airtours. The company also declined comment.
First Choice (FCD) shares had soared this year on the prospect of consolidation in the travel sector. A merger agreement with Switzerland's Kuoni was thrown out by shareholders, but analysts remained enthusiastic about a tie with Airtours.
Friday's slump pulled First Choice stock back to 156 pence from a 1999 high of 259. Airtours (AIR), which lost 6 percent at 417 pence, had been offering 210 pence a share for FirstChoice.
Airtours was believed to be prepared to sell some assets to soothe the regulators, including its in-house Unijet airline, an airline seat brokerage business and its direct holiday sales arm. However, the Commission was reported to want the company to sell some of its retail travel shop network as well.
The U.K. travel sector is distinguished by a highly-integrated structure in which the four largest companies each control tour operators, travel agents and in-house airlines.
Thomson's latest profit warning cited a fall in demand for trips over the millennium period, with travelers more concerned about prices than possible safety concerns related to Y2K computer issues.
-- from staff and wire reports
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