Page last updated at 18:34 GMT, Tuesday, 24 June 2008 19:34 UK

Thomas Cook eyes Russian market

Thomas Cook sign
Thomas Cook is still looking to expand

Tour operator Thomas Cook is attempting to tap into Russia's growing wealthy classes to boost its profits.

The company confirmed it was in talks with two Russian partners about a possible tie-up and said a deal could be signed by the end of the year.

The group, which merged with MyTravel last June, said it would target faster-growing markets as conditions deteriorate closer to home.

It also said losses in the six months to April narrowed to 177.5m ($348.9m).

Both Thomas Cook and its rival TUI have said future growth will come from fast-growing markets, such as Russia, where rising incomes have fuelled demand for holidays.

Chief executive Manny Fontenla-Novoa said the company was also on the lookout for acquisitions, as rivals struggled with rising fuel costs and slowing consumer spending.

"There were a lot of people struggling last year when fuel was $80 a barrel. At $100-plus, I think there's going to be some big opportunities out there," he said.

Even with an economic slowdown, analysts said people were reluctant to sacrifice their annual holiday.

In the past, Thomas Cook struggled with unsold holidays on its books, forcing it to cut capacity and reduce the price of package tours.

However, Europe's second-largest travel firm said it had 19% fewer summer holidays left to sell and it had increased average selling prices in the half-year, compared with the same period a year before.

The company added that UK holidaymakers had suffered because of the strength of the euro against the pound.

"Once they've gone on holiday this year and experienced the weakness of the pound at the resort, I think you'll find that the demand for non-euro countries will accelerate," he said.

Its shares ended the day 3% higher at 241.5 pence.

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