Thomson troubles hanging over rivals

Thomson troubles hanging over rivals

Thomson Travel Group's profits warning has prompted City analysts to review their financial forecasts for Airtours and First Choice.

Analysts have revised their pre-tax profit forecast for Thomson downwards from £135m to between £110m and £115m after it admitted the late sales market for summer '99 was proving particularly tough this year. Last year Thomson made a profit of £122m in the full year to December 1998.

The general view in the city is that Airtours' profit forecast for the year to September 30 will be trimmed by £6m to a new figure of £158m.

One analyst said: "Thomson clearly thinks rivals will be affected, while Airtours and First Choice are saying they are fairly well sold.

"In the case of Airtours, we will have a better idea onAugust 11 when it issues its third-quarter results."

Another analyst claimed First Choice is going to have to work hard as it has already released a pre-tax profit forecast of £60m for the year to September 30.

"It clearly can't change the figure, so First Choice will have to do everything in its power to reach this target," he said. "It could be quite tricky for them, but there are always ways of hitting targets."

Meanwhile, Thomson admitted there had been heavy discounting for UK summer '99 bookings, particularly in May. In its Trading Update the company reported summer '99 UK bookings 3% lower than this time last year. Around 84% of the programme has been sold.

The statement added:"Recent market conditions appear much weaker than last year with late sales being more difficult to sell at satisfactory margins. This was particularly evident for May departures, where late sales discounting for both Thomson and the market overall was significantly above last year.

"The Kosovo crisis and terrorist threats in Turkey during the first half have also impacted sales to a number of the Eastern Mediterranean destinations."

It added: "The late sales market in the UKfor the rest of summer 1999 is proving to be more difficult than last year, with increased levels of discounting required to sell the remaining holiday capacity."

Thomson reported winter 1998/99 volumes for the UKup 7% on winter 1997/8. However, winter 1999/2000 bookings to date are 8% below last year, although sales have recovered in the past four weeks.

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