Germany's TUI AG unveiled a tie-up of its tourism unit with Britain's First Choice to boost its position as Europe's biggest travel firm in the face of new competition from merging rivals.
The two firms said today they planned to create TUI Travel Plc, a London-based tourism giant 51 per cent-owned by TUI with about £12 billion of revenues, just weeks after rivals Thomas Cook and MyTravel announced plans to merge.
Analysts said the move by Thomson Holidays owner TUI and First Choice cast uncertainty over the whole industry.
"You can argue whether regulators would allow the big four to go down to the big three," said Kepler analyst Mark Reed. "And so there must be even more of a question mark whether they will let it (the industry) go down to the big two."
TUI and First Choice said the combined business will have its headquarters and be listed in London, with 49 per cent owned by First Choice shareholders.
First Choice revenues were £2.72 billion in the year to October 31st, while TUI's TUI Travel had pro-forma sales of £9.37 billion in 2006, they said.