Andrew Doyle/MUNICH Herman De Wulf/BRUSSELS

C&N Touristic and Airtours are discussing a merger as Europe's major tour operators position themselves for another round of consolidation after Preussag's recent swoop for Thomson Travel Group (TTG)

Germany's C&N, stung by its defeat in the bidding for Britannia Airways' parent TTG, sees a tie-up with Manchester, UK-based Airtours as its most attractive option, say industry sources.

It had been weighing possible approaches to Airtours' UK rivals First Choice, owner of Air 2000, and Thomas Cook (parent of JMC), which is being divested by Preussag after its acquisition of TTG. Preussag itself owns tour operator TUI and airline arm Hapag-Lloyd.

Part Lufthansa-owned C&N, which uses Condor as its in-house charter carrier, confirms it is looking for an international purchase and has ambitions to expand in the UK market, but would not comment on any talks with Airtours.

Meanwhile, Airtours has moved to bolster its bargaining position by increasing its stake in Germany's loss-making Frosch Touristik (FTi) from 29%to a full 100%, paying £25.4 million ($38.1 million) for the additional equity. It has also decided to close its Air Belgium subsidiary, which operates for Sunair International.

"We believe the level of overall tour operator capacity in Germany is unsustainable and will lead to a restructuring of the market," says Airtours. "It is important to take full control of FTi now, in order to manage the business during this period of significant structural change."

Following the parallel decision to close Air Belgium, the carrier's management wants to stage a buyout ahead of a planned shut-down on 1 November. Airline partners are being sought, with Sabena a possible recruit. The Belgian flag carrier has legal rights over the Air Belgium brand, its Sobelair subsidiary having held a 35% stake in the airline until last year.

Elsewhere in the market, SAirGroup says it is close to finding a major tour operator to partner its struggling 49%-owned German charter operator LTU. Media reports identify Rewe-Touristik - a venture between German tour operator ITS and travel agents DER - as a likely investor.

Preussag's acquisition of TTG remains subject to European Commission approval, with a ruling expected on 26 July.

Source: Flight International