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Airtours issues a profit warning

LONDON. Airtours<.> Travel Group has warned that losses in continental Europe will hit profits this year…

LONDON. Airtours  Travel Group has warned that losses in continental Europe will hit profits this year . The warning, which came despite overall bookings rising, sent its shares plunging as much as 13% on Thursday. This plunge may make the group more vulnerable for an immediate takeover.
The Manchester-based company said that bookings in Scandinavia, Belgium, Holland, the US and France were below last year`s levels.
It said trading in Germany, Europe`s largest holiday market had been particularly difficult.
City analysts had been expecting pre-tax profits for the year to come in at about £165m, but chairman David Crossland knocked about £45m off that figure citing “difficult market conditions” in Europe. He said the company expected losses of about £37m from its German operation and £15m from France and Belgium. Against this the UK was set to bring in profits of about £114m.
“Our investment in new markets, in particular Germany, together with the reorganisation of our existing operations will result in profits below our original expectations for the year. However, we do expect significant benefits next year and thereafter,” Airtours said in a statement.
The group announced it would take over German tour operator FTI for £25.4m ($38.5m) in shares.
Mr Crossland said that Airtours was also in talks with LTU, Germany`s third-largest tour operator, about closer links.
The deal is the latest acquisition in Europe`s fast consolidating tourism industry.
Airtours has been the subject of speculation that it was in merger talks with German firm C&N Touristik, who lost a bidding war for Britain`s Thomson Travel
earlier this year to German rival Preussag.
There have also been reports that C&N may be in takeover talks with rival First Choice, whose takeover by Airtours was blocked last year by European regulators.

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