Slump in Airtours bookings continues

TOM STEVENSON

City Editor

Holiday bookings in the important new year selling season remain more than a third below last year, Airtours shareholders were told at the holiday company's annual meeting yesterday. Despite moves to reduce sharply the number of holidays on offer for next summer, the latest figures confirmed the difficulties travel firms are still facing matching supply with expected demand.

Airtours shares shrugged off the news, despite the doubt cast by the figures on its ability to reverse a dramatic profits slump last year. That was also caused by a big miscalculation of the appetite of British holidaymakers for overseas trips, compounded by a long hot summer that persuaded late bookers to stay at home.

Analysts said the news would have hit the stock harder but for persistent speculation that Airtours might be the subject of a bid approach from Carnival Corporation, America's biggest cruise business.

Last week, a leak forced Airtours to confirm that it was in talks with Carnival which might see the US giant take a stake of up to 29.9 per cent in the British company. A spokesman for Airtours yesterday poured cold water on the prospect of a full bid and the company said only that it would make a further announcement as soon as there was anything to report.

According to the company, bookings across the industry are down 25 per cent for summer 1996 holidays. It excused its own 34 per cent decline by saying brochures had been delayed this year to avoid confusing travel agents. In 1994 a rush of late bookings meant agents were still trying to sell holidays for that year after brochures for the following summer had arrived on their shelves.

The number of holidays travel companies have pre-bought for this summer is running 15 per cent lower than 12 months ago in an effort to reduce overcapacity and avoid the fire sale of unsold trips forced on the industry in 1995. Last year's oversupply was partly caused by reasonably buoyant sales in the early months which ran out of steam later.

Judging the likely demand for package holidays is always difficult for travel companies, with large numbers of holidaymakers leaving their decisions until the last minute when, in recent years, they have been able to pick up unsold vacancies at bargain prices.

About one-fifth of the following summer's holidays are sold by Christmas and a further 25 per cent in the cold, dark months of January and February. After that, however, there is a lull in sales until July and August, when 30 per cent of the year's supply is sold shortly before departure.

Last year, Airtours saw its profits slide from pounds 75.8m to pounds 59.1m, the first decline in nine years. This time analysts expect a return to 1994's profits level, although after stripping out the contribution of the new Sunquest subsidiary underlying profits are still likely to be down on two years ago. Winter bookings of the overseas operations are up 12 per cent.

Contrary to the poor prospects for next summer, Airtours said the winter season was "progressing satisfactorily". Bookings were running 4 per cent ahead of last year, in line with the market as a whole. Going Places, the Airtours travel agency arm, had increased its market share as the benefits of an expansion of its branch network flowed through to sales.