Page last updated at 12:39 GMT, Friday, 11 July 2008 13:39 UK

Thomas Cook cancels airline deal

Condor plane

Thomas Cook has cancelled plans to merge its German charter airline Condor with rival Air Berlin after discussions with the competition regulator.

The German Cartel Office had expressed concerns that the deal could reduce holidaymakers' choice of flights to popular Mediterranean destinations.

Thomas Cook said Condor was still a "strong business" and was looking for an alternative deal.

The two airlines announced plans to merge in September 2007.

In the light of discussions about alternative options for Condor, Thomas Cook also said it was suspending its 375m euro (299m) share buy-back deal.

Thomas Cook expected savings from the merger to total 70m euros a year by 2010.

But analysts said the deal would not necessarily have solved the problems the airlines are facing, particularly rising fuel costs and falling demand.

"We have long expected this, given the ever-declining share price of Air Berlin, the very generous terms and the deteriorating macroeconomic environment," said Landsbanki analyst Mark Reed.

"We do not believe a deal on equally favourable terms is possible," he added.

Thomas Cook shares were up more than 3% in mid-morning trading in reaction to the news while Air Berlin shares rose 5%. They later fell back, along with other airline shares, in response to the price of oil hitting another record high.




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