Thomas Cook-MyTravel to merge

MyTravel and Thomas Cook have agreed a merger in a move which will put intense pressure on Thomson and First Choice and spark further European tour operator consolidation.

The parent company of the planned enlarged group will be named Thomas Cook Group, headquartered in the UK and listed in London.

The merged company would combine Thomas Cook AG's 33 tour operating brands, 2,400 travel agencies, 66 aircraft and almost 20,000 staff with MyTravel's 17 brands, 31 aircraft and 13,000 staff worldwide.

MyTravel handled 5.5 million holidaymakers in 2005-06 and made a pre-tax profit of £44 million, while Thomas Cook AG is the second largest European travel group after TUI. Thomas Cook UK & Ireland made a profit of more than £87 million in the last financial year.

MyTravel and Thomas Cook believe that the annualised pre-tax cost benefits arising from a combination of the businesses will be at least £75 million a year once the full benefits of the merger are realised.

The deal is subject to clearance by relevant competition authorities and is conditional on the sale of Lufthansa's 50% holding in Thomas Cook to German department store group KarstadtQuelle. The board of MyTravel is to unanimously recommend the merger.

Staff at both groups will be affected by "operational restructuring" if the deal goes ahead due to the combination of similar functions, according to a joint statement.

The merger will result in the enlarged group being 52% owned by Thomas Cook's German parent company KarstadtQuelle and 48% owned by the shareholders of MyTravel.
It is expected that the merger will be completed by June 2007, subject to any competition issues being resolved.

MyTravel and KarstadtQuelle have agreed not to pursue any competing transaction - ruling out MyTravel and Thomas Cook bidding for the First Choice mainstream business. First Choice shares slumped by more than 40p on the news.

"The enlarged group will have leading positions in the UK and Ireland, Germany, Scandinavia, Benelux, France and Canada," a statement said. "It will also benefit from a portfolio of excellent brands, an experienced management team with a proven track record and a diverse geographic spread, which together will provide a strong platform for growth."

The merged businesses will be led by a board drawn from MyTravel, Thomas Cook and KarstadtQuelle, complemented by additional independent non-executive directors.

It will be chaired by Thomas Middelhoff, CEO of KarstadtQuelle and chairman of Thomas Cook, deputy chaired by Michael Beckett, chairman of MyTravel. It will be managed on an interim basis by joint chief executives, MyTravel chief Peter McHugh and his Thomas Cook counterpart Manny Fontenla-Novoa.

MyTravel's Beckett said: "This transaction gives MyTravel shareholders the opportunity to participate in the significant value creation being offered by industry consolidation.

"Thomas Cook is a household name and the joining of the two groups will create an even stronger force in this highly competitive market. The enlarged group, which will be based in the UK and listed in London, will benefit from a strong and independent board and an experienced executive team."

Middelhoff said: "We are delighted to see the merger of two such well established industry players which we are sure will achieve significant value creation for us as shareholders from this geographically diverse portfolio of companies.

"We look forward to being a long-term, committed investor in the enlarged group.

"The Thomas Cook team is looking forward to building and growing the enlarged group together with the MyTravel team. The combined organisations will offer customers unrivalled choice and quality for their holiday and leisure time in all of the markets in which we operate."

With permission from Travelmole

Not sure that this is good news unless you're a shareholder in these companies. With small high quality independents like Laskarina and Tapestry ceasing to trade its going to mean less choice and probably cheaper mass tourism. Airtours (latterly My Travel) always had poor customer satisfaction ratings and when TUI took control of Thomson the ratings for Simply went down. Bigger might mean cheaper but probably not better.

Thomas Cook-MyTravel market share in 'low teens'

Bosses of Thomas Cook and MyTravel are confident their merger plans will not be blown off course by regulatory intervention.

Combining Thomas Cook and MyTravel in the UK will give a market share in the "low teens" with a combined total capacity of 6.3 million, according to MyTravel UK head John Bloodworth.

While the deal has to gain approval by the UK Competition Commission and the European Union, Bloodworth said: "We think the competitive pressure with all the low cost carriers and dynamic packaging in the UK really put us in a good position."

The enlarged group will have a combined turnover of £8 billion, against European market leader TUI's £9 billion.

Bloodworth conceded that there will be an unspecified level of redundancies amongst the combined UK staff of 19,000 but stressed that re-deployment will be offered where possible.

It was "obvious" there will be shop closures across the combined high street travel agency network of 1,030 branches - 456 Going Places and 574 Thomas Cook - but he said it was too early to tell how many would remain as the two retail brands had strengths in different parts of the country.

But unions representing agency staff are reportedly calling for urgent talks over the "spectre" of job losses.

Bloodworth, who will become head of UK for the enlarged group, indicated that MyTravel's direct-sell arm Direct Holidays would grow following completion of the merger.

"Thomas Cook does not have a direct distribution model which we do. We have to opportunity to spread that across the brands and grow it," he said.

The two groups' online presence would also enable Thomas Cook/MyTravel to unseat Expedia as the top internet travel company in the UK.

"We're not afraid of the internet and see it as an opportunity to expand another channel," said Bloodworth

He admitted duplication between some of the 30-plus brands between the two companies, such as youth operations Club 18-30 and Escapades, could lead to consolidation but the main Airtours and Thomas Cook tour operating businesses were complementary.

"We want to respect brand equity," he said, revealing that the two sides had been in talks for around two months as they both considered acquiring the mainstream business of First Choice - which has now been withdrawn from sale.

With permission from Travelmole

i work at holiday house and i have heard they are cutting 1000 jobs

The EU have approved the merger of Thomas Cook and MyTravel.
The deal is expected to be completed by June 2007.

its happening on the 19th june. People at mytravels head office in rochdale are being made redundant

Thomas Cook Group to shut 150 agency branches.

The mergered Thomas Cook/MyTravel is to close 150 travel agencies and cut up to 2,800 staff.

As reported by TravelMole yesterday, the Thomas Cook Group's divisional head office will be in Peterborough, with six other MyTravel sites to shut.

The retail network is being reviewed with a view to reducing the network by 150 stores to around 800 stores the company said.

Under the proposals the following sites may close: Rochdale - Holiday House, (head office) Manchester Airport - Commonwealth House (airline operations), Manchester - Lloyds House, (specialist call centre), Helmshore (holidays division and customer support functions), Birmingham (call centre), and Denton (distribution warehouse).

It is proposed that the business will operate from sites in Peterborough - Coningsby Road (UK & Ireland head office), Manchester Airport Hangar 1 (airline operations), Bradford - Aldermanbury (holidays division and customer support functions), Accrington - the Globe Centre (call centre), Falkirk - Central Park (call centre), Glasgow - Granite House (call centre), Brighton - Locksview, (specialist tour operations), and Birkenshaw (distribution warehouse).

"It is proposed that the main retail brand would be Thomas Cook, with the Going Places brand retained in towns that will have more than one store," a statement said, confirming plans to make savings of £95 million.

"The company expects that if the proposals go ahead, an estimated 2,500-2,800 roles will ultimately be affected.

"The Group has stressed to employees that where possible redeployment opportunities will be offered to all affected staff."

The group's key holiday brands will include Airtours, Direct Holidays, Manos, Panorama, Sunset, and Thomas Cook, as well as specialist brands.

The combined aircraft fleet will operate under the Thomas Cook Airlines name.

Joint chief executive Manny Fontenla-Novoa said: "Today's announcement is about a significant UK reorganisation.

"As many as possible of those whose roles are potentially affected by today's news will be offered the opportunity for redeployment within the business, as we are absolutely committed to retaining the skills and experience of all our workforce.

"However, we appreciate that some employees will either not want to take up our offer of redeployment or will not be able to do so. For those employees we will provide appropriate redundancy packages and full support.

"It is only a week since the merger was completed. Our priority has been to communicate integration proposals to our employees as soon as we could. Today we have put in place a comprehensive employee consultation programme to support our people through the integration process.

"We will do everything we can to support those employees who are affected through the next few months."

With permission from Travelmole