Thomas Cook/MyTravel merger – revised savings of £95m forecast
The merger of Thomas Cook and MyTravel will give revised costs savings of £95 million a year, the two companies have revealed.
The figure compares with an original estimate of £75 million where the deal was first announced.
Assuming the European Commission clears the deal on competition grounds on May 4, the merger is due for completion by the end of June.
Both operators also issued trading updates which saw MyTravel’s summer bookings in the UK down 6.6% and Thomas Cook 2% down.
MyTravel has further cut capacity, which is expected to be 8.6% less than last year.
Thomas Cook has also cut airline capacity but expects improved trading conditions in the lates market.
A statement said: “With 45% of MyTravel Group capacity for the summer left to sell, it is still too early to predict the outcome of the summer season with certainty. However, it is believed that, in the absence of significant adverse events such as were experienced last year, trading conditions in the lates market should be significantly improved. Performance for the full year is therefore expected to be in line with expectations.”
In relation to Thomas Cook, the statement said: “For the summer, bookings are at an early stage; Thomas Cook is approximately 55% booked across all markets as at 14 April 2007. In the UK, bookings are 2% down and prices are flat. For Continental Europe, bookings remain 7% below the previous year mainly due to shifts in booking trends, while prices are up 3%.”
Issuing a prospectus for the proposed merger, the boards of the two companies said it would take between 24 and 30 months for the “full synergies” to be realised.
Meanwhile, it is estimated that integration and reorganisation costs associated with achieving these cost benefits will be no more than £125 million in total and will be incurred over a period of 12 to 18 months.
No mention was made of likely job losses as a result of the combination of the two groups which will create a newly incorporated company – Thomas Cook Group – owned 52% by Cook’s German parent KarstadtQuelle and 48% by existing MyTravel shareholders.
by Phil Davies
Phil Davies
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