First Choice in talks over business sale
First Choice Holidays today said it was in discussions with a number of suitors over the sale of its package holidays business.
First Choice said it was reviewing its options for the division, which runs 32 aircraft, has more than 300 high street outlets, and is responsible for taking 2.5 million customers on holiday every year.
Reports yesterday said tour operator MyTravel was in talks about buying the business – worth an estimated £500m (€738m) – while Thomas Cook is also thought to be interested.
First Choice today said “there can be no certainty” a bid will be made and any sale is likely to attract the attention of the competition authorities.
The sale of the mainstream holidays arm would allow First Choice to concentrate on its operations providing specialist trips and activity breaks, such as Sunsail and Trek America.
First Choice said: "Following recent press speculation regarding its mainstream business, the board of First Choice confirms that it has been reviewing how it might continue to maximise the potential of this market leading tour operating business.
“It is considering a range of alternatives in this market and discussions with a number of parties are at a preliminary stage. However, there can be no certainty that any transaction will be forthcoming.”
Last year, First Choice generated around £54m (€79.7m) of operating profits from the mainstream business, which includes the Falcon and Sunstart brands.
With the travel industry faced with rising fuel costs and a fall in demand for package holidays, First Choice has embarked on a strategy that has seen it cut capacity and switch its focus to long-haul destinations and niche trips.
The changes appear to be paying off after it reported a 5% improvement in underlying losses in its quieter winter period.
It is due to report full-year results on December 7, a week before figures from MyTravel.
Rumours of a merger or takeover in the industry had been rife in recent weeks.
MyTravel was on the brink of collapse in 2003, but is due to report profits of more than £40m (€59m) for 2006 – the first surplus since 2001.
The company’s chief executive Peter McHugh, who has led the turnaround, recently pointed to the prospect of deals in the sector.
Earlier this month he said: “We believe that in the package-holiday business in the UK consolidation is likely to happen, but I don’t know whether that will happen in three months or three years.”
A bid by Airtours – later renamed MyTravel – for First Choice was blocked initially in 1999.
