Andrew Doyle/MUNICH

German tour operator Preussag has out-bid Lufthansa-backed rival C&N to take control of the UK's Thomson Travel and in-house carrier Britannia Airways, bringing the latter under the same roof as its TUI subsidiary's airline, Hapag-Lloyd.

The deal means Hapag is likely to scrap operational ties with JMC Airlines of the UK, since Preussag will have to sell a controlling stake in JMC's parent Thomas Cook to satisfy the competition authorities. The two carriers had been evaluating joint purchase of new long-haul aircraft.

The Thomson takeover surprised the market because Preussag chairman Michael Frenzel had earlier dismissed C&N's 160p (242¢)-per-share offer as an overvaluation, and he had described selling Thomas Cook to win Thomson as a "strange idea". Preussag was clearly forced to respond to the C&N move, but some analysts queried its 180p per share offer, which values Thomson at £1.3 billion.

As Flight International went to press, Preussag had secured 34.7% of the UK company, buying a 22.7% stake held by Thomson family-owned Woodbridge International Holdings and more shares from Thomson directors and on the open market. Preussag will float a large minority stake in Hapag to help finance the deal.

Attention now focuses on other players in the sector, with C&N said to be eyeing Thomas Cook. The latter could also prove attractive to Swiss long-haul specialist Kuoni, parent of Eidelweiss Air. Kuoni last year moved to link with Air 2000 parent First Choice, but was outbid by Airtours, only to see European Union competition chiefs block the deal.

Airtours has meanwhile confirmed it is talking to SAirGroup, owner of 49.9% of troubled Düsseldorf-based airline LTU, about the "possible combination" of their German tour operating interests. A C&N/Airtours deal is possible.

Preussag's TUI uses LTU to provide much of its long-haul capacity, while Thomson's German arm Britannia Deutschland flies for FTi, part-owned by Airtours - prompting speculation that the Britannia aircraft could be deployed for TUI instead, with LTU taking over the FTi work.

Source: Flight International