WRAPUP 1-Thomas Cook up on Arcandor relief; keeps Condor
* Arcandor says to retain Thomas Cook shareholding
* Thomas Cook pulls out of three-way airline merger talks
* Thomas Cook says on track to meet FY expectations
* TUI Travel says on track to meet 2008, 2009 expectations
LONDON, Sept 29 (Reuters) - Shares in Europe's second-biggest travel firm, Thomas Cook (TCG.L), were the biggest FTSE-100 .FTSE riser on Monday after its 53 percent shareholder Arcandor (AROG.DE) said it would not need to sell any of its stake in the group.
Thomas Cook also said it had pulled out of talks to merge its charter airline Condor with TUI Travel's (TT.L) TUIfly and Lufthansa's (LHAG.DE) Germanwings and is on track to meet market expectations for the current year [nLT428038].
Europe's number one travel firm, TUI Travel, said it is confident of meeting its expectations for the current year and 2009 and said trading in the last seven weeks had progressed as it anticipated [nLT421632].
Shares in Thomas Cook were up 4 percent at 211-1/4 pence, as fears over a possible stock overhang, which had weighed on the shares in recent days, were removed.
Germany's Frankfurter Allgemeine Zeitung reported last week that Arcandor's lenders had been pressurising the troubled German tourism and retail group to divest its 52 percent stake in the tour operator.
JP Morgan analyst James Ainley said Thomas Cook shares had been extremely weak over the past few days based on the potential for a forced sale of Thomas Cook stock from Arcandor.
"We think that there should be some relief in the share price as investors refocus on the positive fundamentals," he said.
NOT ENOUGH UPSIDE FOR DEAL
Thomas Cook's chief executive, Manny Fontenla-Novoa, told reporters the financial prospects for a proposed three-way airline merger were not good enough and he was confident that Condor could flourish as a standalone airline [WLA0379].
Fontenla-Novoa said the changing dynamics of the airline industry meant that there was a less convincing argument for increasing capacity through the proposed three-way merger.
"The whole airline industry has totally changed and capacity has been taken out pretty much by everybody," he said on a conference call.
TUI Travel said it is continuing to explore alternatives for its German airline operation.
TRADING REMAINS STRONG
Thomas Cook said trading in the summer 2008 season had been strong and was confident it was on track to meet its expectations for the full year ending Sept. 30.
The group said winter 2008/9 trading is in line with its expectations and particularly strong in the UK.
Thomas Cook, created last year from the tie-up of Arcandor's travel unit and Britain's MyTravel, said it is on track to achieve merger synergies of more than 155 million pounds by 2008/9.
TUI Travel said it has now sold 94 percent of its summer 2008 offering in the UK, which is 3 percent ahead of last year, enabling it to reduce the level of discounting compared to previous years.
TUI Travel and Thomas Cook have been cutting capacity, leaving them with fewer holidays to sell and enabling them to avoid deep discounting on late bookings.
TUI Travel said it is pleased with summer 2009 trading in the UK, which is the only key market currently on sale.
Shares in TUI Travel were unchanged at 221-1/4 pence at 0900 GMT, as strong current trading offset disappointment over the collapse of the airline merger talks.
Blue Oar Securities analyst Derren Nathan described TUI's update as "relatively reassuring" but said the failure of the airline discussions was "something of a blow". (additional reporting by Eva Kuehnen in Frankfurt; Editing by Paul Bolding)
