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Manny Fontenla-Novoa, the CEO forced out by Thomas Cook after three profit warnings and a bank bailout in 2011, is back in the spotlight a decade later as two European travel companies prepare to merge.
Fontenla-Novoa became president of online travel agency Logitravel in 2018, after it bought Magic Rooms, a business he founded in 2014. It now plans to to merge with Spanish agency group Viajes El Corte Ingles, creating a new company which aspires to become a global player, competing with the likes of TUI.
The transaction is subject to the approval of Spanish independent competition regulator Comision Nacional de los Mercados y la Competencia, while the name of the new company has yet to be decided.
Logitravel has 1,000 employees, and claims it supplies accommodation to 4.5 million customers worldwide. Viajes El Corte Ingles was founded as corporate travel agency in 1969 to book business trips for the different departments and companies of parent company El Corte Ingles Group.
Once given the green light — which it’s tipped to be — the new entity would have combined annual sales of $4 billion, based on 2019 figures. It will employ 5,000 people, and have 500 points of sale around the world. El Corte Ingles will retain 75 percent control of the group and Logitravel the rest, local newspaper El Pais reported. It would have a strong presence in Spain, Portugal, France, Germany and Latin America.
The sales figures are some way off from TUI’s pre-pandemic annual revenue of $22.4 billion, but during the pandemic the package holiday giant has received bailouts of at least $6 billion and is slashing 8,000 jobs as part of its cost-cutting program. For the six months to March 31, 2021, TUI reported revenue of $868 million compared with $8 billion in the same period last year.
The new Viajes El Corte Ingles/Logitravel company claims it will “launch without debt and with a solid financial position.”
A New Thomas Cook?
Fontenla-Novoa oversaw Thomas Cook’s merger with MyTravel in 2007. The travel company continued to expand, buying up niche brands, and organized an ill-thought out share buyback program, before collapsing in 2019. China’s Fosun Group picked up the pieces a year later.
Fontenla-Novoa will now be responsible for strategy and expansion of the new company, according to reports. However, he’ll be overseen by Jorge Schoenenberger, who took up the role of CEO of Viajes El Corte Ingles this month. He joins from Deloitte in Spain, where he ran the accountancy firm’s travel, hospitality, leisure and transport division for 25 years.
Viajes El Corte Ingles did not respond to a request for comment.
“This looks like a consolidation opportunity to fill the vacuum left by Thomas Cook, as well as the consequences of Brexit and the rebuilding of the travel industry after the global pandemic. I wish all success to the leadership team in this new venture,” said Karen Simmonds, founder of UK travel agency Travel Matters.
“But it baffles me how some companies, as well as individuals, can reinvent themselves and it goes unnoticed. Some people have short memory spans, and I hope this next venture never leads to the sizeable earthquake that occurred in the not too distance past,” she added.
While the new pan-European company will have a leisure focus, it also coves business travel, incentives, conferences and events.
“While many see Viajes el Corto Ingles as a leisure agent, you shouldn’t underestimate its popularity in the Iberian markets as a strong travel management company, regularly beating the likes of American Express Global Business Travel and BCD Travel to the punch,” said Riaan van Schoor, CEO of agentivity.
However, he added that both organisations may be “too set in their traditional ways” to contemplate something innovative enough in the travel management space to become a serious global competitor to the new technology-first platforms emerging today.
“There’s going to be more consolidation as we go forward,” said Mark Smith, head of business development at Simplexity Travel. “I think they’re trying to plug a hole from where Thomas Cook left. But whether they can break into the UK market, I don’t know,” he added, noting the rise of Jet2holidays and easyJet Holidays over recent years.
CORRECTION: This article has been updated with additional comment from Karen Simmonds.