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Virgin Atlantic-Thomas Cook Airlines' long haul tie up to face hurdles

Virgin Atlantic has reportedly expressed interest in buying the long haul operations of Thomas Cook Airlines. The specialist leisure airline is the UK's number five operator of widebody aircraft, while long haul specialist Virgin Atlantic is second in this regard. Thomas Cook Airlines' seven Airbus A330-200s would fit well with Virgin's three of the same variant and its 10 A330-300Es.

The majority of Thomas Cook Airlines' capacity is short/medium haul and unlikely to interest Virgin. However, Virgin is likely to be attracted by its routes from the UK to North America and the Caribbean. Thomas Cook Airlines' long haul operations also include Central America, which Virgin no longer serves.

On six overlapping routes to North America and two to the Caribbean a combination of the two airlines would lead to a high market share, and this may raise competition concerns. Other hurdles include Thomas Cook Airlines' strongly seasonal schedule, skewed to the summer to a much greater extent that Virgin's more year-round operation. There is also likely to be competition from other bidders, who may be prepared to buy all of the Thomas Cook Group's airlines to expedite a deal.

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