BA and Thomas Cook holiday marriage

The European travel market is hugely competitive

British Airways and Thomas Cook are to merge their UK tour operating businesses to save on costs.

The announcement follows hard on the heals of the £550m take-over of Thomas Cook by German firm C&N Touristic.

This is a marriage of two of the quality brand names in travel

Dale Moss, BA director of sales

The latest deal will bring together two of the biggest names in travel in a 50-50 joint venture.

The new company, which has yet to be given a name, is expected to grab 16% of the UK holiday market.

Splitting profits

The joint venture will be fully operational from the first half of next year, pending European Commission approval.

"This is a marriage of two of the quality brand names in travel," Dale Moss, director of sales at BA, said.

The venture would allow for cheaper holiday packages and more choice while the companies improve efficiencies in distribution and buying hotel rooms and flights, Moss added.

The companies say they are complementary in terms of geography, with Thomas Cook strong in holidays to North America and Egypt and BA in Caribbean, Florida and Asia destinations.

"With independent scheduled travel being one of the fastest growing sectors in the industry, we have been looking for expansion opportunities," Thomas Cook Chief Executive John Donaldson said.

"British Airways is the best possible partner for us."

Separate brand names

The two brands will continue as separate names through Thomas Cook's retail network and BA's Travel Shops and other travel retailers.

The operation of the new company will be split between Thomas Cook Headquarters in Peterborough and BA's offices in Crawley, under a new management team.

Profits will be split down the middle.

Shares in British Airways added 5.5p or 1.4% to 413p on the news.