TUI and First Choice merge to create TUI Travel

TUI and First Choice are to merge creating Europe’s largest travel company TUI Travel.

The enlarged company, in which TUI will take a majority 51% stake, expects to see pre-tax cost savings of at least £100 million a year within the next three years.

First Choice chief executive Peter Long will run TUI Travel with TUI northern Europe chief executive Peter Rothwell reporting into Long as deputy chief executive. TUI chief executive officer Dr Michael Frenzel will chair TUI Travel.

The merged company will take around 27 million customers to 200 destinations every year. First Choice chairman Sir Mike Hodgkinson said the merger gives the group “a unique opportunity to enhance margins”.

The deal follows hot on the heels of MyTravel’s merger with Thomas Cook, announced last month.

Both enlarged companies would have UK shop networks of more than 1,000 although consolidation among the shop network has been listed among the synergies TUI and First Choice are expecting. It also expects to see an increase in sales over the Internet.

The mergers still have to gain approval from the various competition and regulatory bodies in the UK and Europe but TUI and First Choice are expcting the deal to be finalised in the third quarter of this year.

Accountancy firm White Hart Associates partner Chris Photi said it was inevitable that consolidation would take place among the big four although he said he was surprised with the speed at which the four have become two.

If approved, the mergers would lead to holiday prices rising, he said. “In the long term it likely will mean that the consumer will pay more for their holidays in the UK.

“However I do not consider this to be a bad thing as this will bring the UK market more into line with the rest of Europe and will stabilise the industry as it has survived on too small margins for too long.”

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