Emirates Group has snapped up part of Thomas Cook as the Dubai-based carrier builds a global travel agency business to help to feed its rapidly expanding route network.
It comes as the London-listed travel agent seeks to rebuild its business three years on from the start of the Arab Spring, which had a devastating impact on its package holiday business across North Africa.
Thomas Cook, one of the world’s best-known travel agency businesses, is selling assets in a bid to revive its fortunes. It said yesterday it had sold its Gold Medal Travel Group to Emirates-owned dnata for £45 million (Dh271.8m), as it pared its fourth-quarter loss.
The sale includes the Gold Medal Travel Group’s online travel agent Netflights.com, formerly Airline Networks, and Pure Luxury, which provides customised luxury travel packages.
The British company also sold Elegant Resorts, another luxury tour provider, to the Saudi travel group Al Tayyar for £14.3m as part of its efforts to reduce debt.
“Dnata has made no secret it aims to become a global player,” said Saj Ahmad, the chief analyst at StrategicAero Research.com. “This buy of Gold Medal in a very high-yield traffic market like the UK is arguably their first true foray to realising their growth capability. Where Emirates is expanding, dnata is not far behind.”
The 470 employees at Gold Medal, based in Preston, northern England, are expected to keep their jobs as dnata takes over.
“Gold Medal promises to add value to Emirates as well as augment demand for the rest of the travel industry,” said Gaurav Sinha, the founder and chief executive of Insignia, a branding agency
The euro-zone crisis, diminished appetite for overseas travel and high fuel costs have hurt the 173-year old Thomas Cook. But the company’s disposals present an opportunity for Emirates, which has been quietly growing its online bookings business.
In 2011, dnata acquired a majority stake in the British online travel agent Travel Republic. In 2012, it inked a deal with Travel Counsellors, an agency that started in the United Kingdom but now operates from the UAE. Dubai-based dnata operates in 38 countries, providing ground and cargo handling, travel and catering services.
This latest acquisition complements “dnata’s established international travel offering, and will further enhance the proposition we offer our customers”, said Iain Andrew, a dnata spokesman.
Gold Medal will, however, continue to provide exclusive scheduled air travel and car rental products to Thomas Cook UK.
Gold Medal handles more than 275,000 travel bookings annually and is one of the biggest tour operators to Dubai, according to dnata.
In its latest quarterly results published yesterday, the company posted a operating loss of £56m, which was a 15 per cent improvement from the same period a year earlier.
Much of that loss was attributed to the Arab Spring effect on its package holiday business. Sales dipped by 0.9 per cent to £1.65 billion in the last quarter, mainly because of lower demand for winter holidays to Egypt, it said.
The British government issued a travel warning last year, including parts of the Sinai peninsula that feature the popular seaside resorts of Sharm El Sheikh and Hurghada.
Shares of Thomas Cook were trading at £1.82 around midday UAE time, down 1.62 per cent from Monday’s close. That is up from 76 pence a year ago.