Thomas Cook scraps three-way Condor merger as competitors fail

Dublin: Thomas Cook Group Plc, Europe's second-biggest tour operator, scrapped a three-way airline merger with Deutsche Lufthansa AG and TUI Travel Plc, saying the Condor unit could stand alone now that competitors have failed.

Chief Executive Officer Manny Fontenla-Novoa said yesterday that he "didn't see enough upside" or savings from the proposed merger between Condor, Lufthansa's Germanwings and TUIfly Germany. The negotiations were announced a month ago.

Thomas Cook, based in Peterborough, England, said it also expects to meet its full-year earnings targets, helped by reduced capacity in the tourism industry following the collapse of rival XL Leisure Group Plc.

The shares rose in London trading, helped as controlling shareholder Arcandor AG said it wouldn't sell some of its stake.

"In the last year the whole airline industry has totally changed," Fontenla-Novoa said on a conference call. "Capacity has been taken out by almost everybody. We are much more comfortable that Condor can continue as a stand-alone airline," he said, calling the division "extremely profitable".

Thomas Cook added 6 pence, or 3 per cent, to 208.75 pence at 9am in London, its first gain in six trading sessions.

The merger talks had followed the failure of previous discussions to sell the business to Air Berlin Plc, which pulled out in July. The companies had sought to rationalise the German low-cost airline market as oil prices soared.