TUI and First Choice Merge

One of Europe’s biggest tourism enterprises, TUI, announced last month that it is merging its tour operations with First Choice to create Europe’s largest tour operator.

The deal follows Thomas Cook merging with MyTravel and will result in consolidation of Europe’s mainstream tour operating businesses from four to two.

German TUI AG will take at 51% in a business to be called TUI Travel, based in the UK. First Choice would take the remaining 49%.

The new look group would have 27 million customers in 20 source markets, sales of £12 billion and a market value of more than £3 billion. The combination of the two groups will bring more than 200 brands under a single umbrella.

The deal will most likely be completed by the third quarter of the year -subject to regulatory approvals.
A joint statement said “cost synergies” are expected to arise mainly in the UK- where both companies run separate headquarters in Luton and Crawley and each has rival travel agency chains.

The companies outlined a list of eight areas where savings will be made, including consolidation of retail, call center and administrative costs; streamlined distribution (including shops); higher internet traffic; reduced marketing and commercial costs; airline flight planning and operating; destination cost efficiencies and yield improvement.

First Choice, which employs more than 15,000 staff and operates 34 aircraft, had been talking to both MyTravel and Thomas Cook about the sale of its mainstream tour operating arm until the two rivals agreed to get together just months ago.

TUI has a fleet of 127 aircraft and following the merger the new company will retain a majority of the TUI hotels and resorts business, operating 279 hotels with 164,844 beds.