Tour operator First Choice saw its shares rocket yesterday after revealing plans to merge with the tourism division of German rival and Thomson Holidays parent Tui.

News of the deal, which is set to create a new company called Tui Travel with £12.1 billion in combined sales, was received well by investors as First Choice said the merger would help save at least £100 million a year within three years across both businesses.

Jobs could now be on the line as a result of the Tui deal, as First Choice revealed more than £60 million of the annual cost savings would come from the back office operations of the two businesses.

First Choice chief executive Peter Long, who will take the same role at the newly enlarged group, said the impact on employees was not yet known, but that the two businesses hoped to offer alternatives to staff affected.