Thomas Cook eyes special div, China, India

By Marc Jones

LONDON (Reuters) - Thomas Cook (TCG.L: Quote, Profile, Research, Stock Buzz) mounted a robust defense of package tours on Tuesday and pledged to expand its business into China, India and Russia as the newly enlarged holiday firm made its market debut in London.

Thomas Cook Chairman Thomas Middelhoff told Reuters that the firm had plenty of firepower to strike deals, but would also consider paying a special dividend to shareholders if no suitable acquisitions could be landed.

"The combined Thomas Cook-MyTravel cash flow production is incredible. The banks have already contacted us and said: 'You should either make an acquisition or consider a special dividend.'"

"This is now the big question, should we maybe do a mix -- a special dividend and an acquisition or do we see something that is so attractive that we are saying we have to go for it. We are working on this."

Middelhoff said the firm's management would come to a decision on what to do with the cash following a strategy meeting planned for September or October.

He said the firm would also target Asian holidaygoers as booming emerging economies and fast rising disposable incomes boost the numbers of people taking trips.

"I believe we should seek future growth markets and for me this is very much India, China, Russian and maybe Japan."

"In 10 years from now a third of the worldwide travel volumes will be generated out of China. So this is, I believe, what we should prepare for."

He added that the firm would look to gain a foothold in China by either growing organically, via acquisitions or by linking up with a Chinese operator.

In mature markets such as Britain and Germany, the traditional package holiday has struggled to keep up with the Internet revolution, which has given tech-savvy holidaymakers the ability to piece together their own trips rather than book through a travel agent.

Middelhoff said that Chinese holidaygoers still appeared to have a preference for the traditional package break.

"The Chinese mentality even suits the classical tour operator so we will set ourselves for growth there."

COST SAVINGS

Thomas Cook started trading in London on Tuesday following its acquisition of MyTravel.

The deal kick-started a process which saw the European package holiday market shrink from four major players to two after TUI (TUIGn.DE: Quote, Profile, Research, Stock Buzz) agreed to buy First Choice FCD.L just weeks later.  Continued...