Profits at Britain's largest tour operator Airtours plunged last year on the back of poor millennium sales.

But Airtours said its investments and acquisitions in the period had given it an "excellent base for future profit growth".

Chairman David Crossland said: "While trading was poor over the millennium and we continue to incur costs in reorganising some of our businesses, we were satisfied with the overall level of bookings achieved last winter and are pleased with the current level of bookings for summer 2000."

He said the group had leading positions in Scandinavia and the UK and had continued expansion in Germany. Last year the company also acquired U.S. cruise company TSI for £243.4 million.

However, Mr Crossland gave no hints about his company's role in the continuing consolidation of the European travel industry.

Industry speculation has mounted in the last few weeks that Airtours could be set to link up with German group C&N Touristic.

C&N recently lost out to its German rival Preussag in the battle to takeover Thomson Travel and is thought to be still keen to gain a foothold in the UK travel business.

Mr Crossland said his group had continued to build passenger

volumes and that it was currently the number one operator in the UK and Scandinavia with six million

and two million passengers

respectively.

Airtours' current hotel portfolio comprises 77 hotels with 40,000 beds. It is looking to expand through long term leases and by converting existing freehold sites into leaseholds.

Losses before tax in the six months to March 31 were £75.3 million, including £13.4 million in one-off costs, compared with a loss of £27.5 million in the comparable period last year. Turnover was

£1.43 billion against £1.27 billion.

Shareholders will receive an interim dividend payment of 1.8p compared with 1.65p last year.

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