MyTravel alert as family bookings halt

MYTRAVEL, formerly known as Airtours, has sparked concerns of a collapse in the European package tour market by warning that British families had suddenly postponed their summer holiday bookings.

With losses spiralling in the first half of the year, MyTravel warned that full-year profits would fall short of those in 2001 as holidaymakers waited for last-minute bargains. The group had said in February that it would make up the post-11 September shortfall of nearly £59m in the summer.

The shares dived more than 24% while First Choice tumbled more than 6% and Preussag, owner of the Thomson travel group, also fell sharply.

MyTravel chief executive Tim Byrne said that, only weeks away from the high season, he still had a million summer holidays left to sell. Those bookings will be discounted from the brochure price by an average of £25 each, effectively wiping £25m from profits for the year. 'Six weeks ago family bookings from our UK customers stopped,' he said.

Customers were waiting for late bargains but, having seen the industry axe about a million package tours in the face of the US terrorist attacks, many will be unable to find the holiday they want, he claimed. Preussag warned recently of a continued weakness in European package-tour bookings, although First Choice last month said it continued to be pleased with the recovery. Given the apparent suddenness of MyTravel's woes, First Choice's results on 11 June will be keenly awaited.

In a move compounding concerns for the sector, reports said Thomas Cook was axeing yet more holidays, on top of the 10% capacity reduction already announced.

Having reported first-quarter losses up by £58.8m, MyTravel saw an overall pre-tax loss for the six months to 31 March of £157m. That compares with a loss of £97.6m a year earlier. MyTravel always makes its profits in the peak summer season. Turnover fell to £1.71bn from £2.1bn. The interim dividend is pegged at 2p a share.

Better news came from Germany, where MyTravel's struggling FTi business reported narrower losses thanks to prices 20% higher than a year earlier, albeit at a winter charter capacity 34% lower than before.

House broker Deutsche Bank slashed its full-year profit forecasts to £115m from £150m. WestLB Panmure switched its rating from 'outperform' to 'sell'.