TUI Travel considers future of TUIfly

TUI Travel, the largest of Europe’s travel firms, is looking closely at a number of options for the future of its budget carrier TUIfly, after talks with rivals regarding a merger collapses, according to the firm’s chief executive, Peter Long.

A three-way merger with Condor - owned by Thomas Cook - and Lufthansa’s Germanwings was under consideration before talks broke down in September of 2008. At that time, Thomas Cook pulled out of the negotiations, saying that the climate in the airline industry meant that increasing capacity no longer made sense.

“What we’ve got to do now is decide which course of action we want to take. At the moment, that (process) is still a work in progress,” Long told Reuters. “It could be an internal solution or an external solution. We know what we want to do. It’s just about how we execute it.”

Analysts note that possibilities include selling the airline outright, selling a stake in it or holding on to the business but reducing capacity.

Airline operators everywhere have been reducing capacity in order to cut costs and maintain profitability, in response to the global economic downturn that followed soaring fuel costs during the first half of last year.

Thanks to www.guardian.co.uk for the above quotes, for more information on this article please visit their website.

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