Jobs fear after travel agents agree merger

With more than 1,200 shops, the newly-formed company will be the UK's largest travel agent and second biggest in foreign exchange.

The tie-up will enable Thomas Cook to streamline costs in the face of a sluggish travel industry and expected period of weak consumer spending.

Savings of around 35m a year from the merger are expected to be achieved through job losses, store closures and the combination of existing head offices into Thomas Cook's current Peterborough HQ.

It is feared the merger will cost hundreds of jobs. The Usdaw union said it planned to hold talks with the new company in the coming months.

Gerry Doherty, leader of the TSSA union, which represents Thomas Cook staff in Peterborough and high street travel shops around the country, said: "We obviously hope the merged company brings new business and new jobs in the wake of the merger but we are mindful what the short-term consequences could mean, especially for back office staff.

"We shall be holding urgent talks with Thomas Cook to make sure those consequences do not mean large-scale job losses for our members."

Thomas Cook has 78 branches in Yorkshire and the Co-op has 46.

Staff at Co-operative Travel, which started life as a day excursion business in 1905, are based at the head office in Burslem, Stoke-on-Trent. The company also operates call centres in Manchester and Barrow, in Cumbria.

Peter Marks, chief executive of the Co-operative Group, said it was too early to confirm store closures and the number of job losses among the combined workforce of around 9,000 staff.

He said: "This is really about job creation and protection, but yes of course, by combining the two head offices there will be some job losses."

Mr Marks added: "This is a marriage of two of the industry's most trusted brands – The Co-operative and Thomas Cook. And, it comes at a time when consumer confidence in the travel sector, like the economy, is in need of a boost."

Co-operative Travel, which employs 3,000 staff, will also include its home-working business, which has 345 staff selling holidays from home, its web and call centre operations and Freedom Travel, its franchise group.

Thomas Cook, which will own 70 per cent of the new company, is struggling with a drop in demand for overseas holidays, as anxious Britons opt to stay at home.

Last month, the group confirmed it was reviewing its total UK workforce of between 13,000 and 15,000 staff, as well as its supplier base and all divisions in its UK arm, in a bid to cut costs.

Thomas Cook Group chief executive Manny Fontenla-Novoa said: "Today's announcement together with our plans to cut costs and streamline the rest of the UK business, will put us in a much stronger position, should market conditions in the UK remain weak, and will build a firm foundation for the future."

Thomas Cook and Co-operative Travel stores will continue to operate under their own brands, but Thomas Cook's Going Places shops will be rebranded as Co-operative Travel.

The deal is subject to regulatory approval, but the companies hope the tie-up will be completed in early December.

The Midlands Co-operative is also expected to join the deal as well, adding a further 103 stores to the portfolio. The addition, to be confirmed in the next two weeks, would give Midlands Co-operative a 3.5 per cent stake in the new company.

Nick Batram, analyst at KBC Peel Hunt, said the merger would go a long way in improving Thomas Cook's cost base within its UK business.