TUI acquires Transat unit to become market leader in France

11th May 2016, Comments 0 comments

German tourism and travel giant TUI unveiled Wednesday plans become market leader in France by acquiring the French unit of Transat, while it would also sell off a portfolio of specialist tourist brands.

"TUI has agreed to acquire Transat tourism group's French tour operating business ... in order to strengthen its market position," the German group said in a statement.

"Due to the acquisition, TUI France is not only expected to achieve sound profitability but also to become the market leader in France," ahead of Karavel-Promovacances, it said.

TUI said it would pay 54 million euros ($62 million) for Transat France, which owns the Look Voyages and Vacances Transat brands, employs a workforce of 560 and had 375,000 customers last year travelling to key destinations of Spain, Greece, Cuba and the Dominican Republic.

Pending regulatory approval, the deal was expected to be completed by the autumn.

"The French market is traditionally not an easy one, but it's an important one," said TUI chief executive Fritz Joussen.

"We're confident that the French activities will develop positively and that's why we're investing there," he said.

- Difficult environment -

Since merging with British arm TUI Travel at the end of 2014, TUI has been reorganising all of its key markets, hotels and cruise holidays activities under the same roof to create an integrated tourism group.

Pointing to a number of recent attacks at holiday destinations, Joussen admitted that "there is no doubt that the market environment has been difficult" in recent months.

As holidaymakers stay away from destinations such as Tunisia, Egypt and more recently Turkey, TUI has quickly switched its focus to other destinations such as Spain or the Caribbean.

TUI has also recently sold its Hotelbeds unit, which describes itself as the number one bedbank worldwide, to two investment funds for 1.2 billion euros.

And the group also announced Wednesday the sale of The Specialist Group, which covers specialist travel brands, such as Sunsail or Flexiski.

"The Specialist Group is a great collection of more than 50 brands and successful companies. However, there is little vertical integration with the core tourism businesses," CEO Joussen said.

"We believe that a disposal of Specialist Group in one transaction is the best way to maximise value from these businesses for TUI's shareholders."

TUI, which operates its business year from October to September, also published its results for the first six months.

Sales grew by 2.7 percent to 6.8 billion euros. The group booked a bottom-line loss of 449 million euros in the six-month period, wider than 201.5 million euros a year earlier. This was largely due to writedowns on its stake in Hapag-Lloyd.

At an underlying level, the operating loss narrowed slightly to 470.6 million euros from 474.2 million euros.

TUI usually makes a loss in the winter months and it said that the summer holiday bookings were "in line with expectations."

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© 2016 AFP

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