THE jury is still out on Airtours after the Stock Market gave its shares another bumpy ride yesterday.

On the back of a 23 per cent fall in profits, the stock fell 16p, or 6.75 per cent, to 221.5p.

Analysts, initially disappointed by a lack of news on the take-over front, say the Airtours board must prove that it can turn around the troubled German business Frosch Touristic - the major cause of its Millennium-year misery before the market will start to look favourably at the Manchester company once more.

Peter Reynolds, a leisure analyst at UBS Warburg, says the company faces an ''uphill struggle'' to achieve this. ''I think it will be a big, uphill struggle. They have got a lot of work to do to turn the business around and to drive some good returns out of all the businesses they have bought this year. While it will be difficult, there is no reason why they can't do it,'' he said.

While they try to reverse the decline, the Airtours leaders will know that with the share price languishing at around 220p - less than half the 550p peak of last year - the company will be seen as a takeover target.

With German giants Preussag and C and N Touristic seemingly both out of the frame, a smaller German company, Rewe, is believed to be having a serious look at making an offer. But experts believe a key factor could be whether Rewe wants to and is allowed, on competition grounds, to take on the troubled Frosch Touristic business.

The Carnival Corporation, the world's largest cruise operator, which already owns 25 per cent of Airtours, has long been seen as a potential bidder.

Carnival may be deterred from bidding, because as a North American company, it would not be allowed to take on the European operating licences held by the Airtours International airline.

Airtours strenuously denied earlier this week it had put itself up for sale and was ready to accept a 400p per share bid. If the share price is to recover, much depends on whether it can convince shareholders and analysts that it is a good long term bet.

New chief executive Tim Byrne, who admits 2000 had been Airtours' hardest year, carries a heavy weight of expectation on his shoulders.

Mr Byrne, who is seen as the protege of Airtours founder and executive chairman David Crossland, believes a three-pronged strategy will return the company to favour.

He explains: ''We are now in a position to be driving out costs across the business in all areas.

''In the UK in 10 years we have grown from carrying 600,000 to 6,000,000 people, we have had similar scale growth in Scandinavia too where we are also number one in the market.

''We will be focused on taking out duplicated costs and making the business more efficient.

''The second strand is to expand in North America, which is obviously a massive market. We would look at no-risk businesses, away from charter holidays.''

The third area for focus, is e-business and will see a roll out of the successful mytravelco concept.

Operating successfully in the US, mytravelco is a global travel service. It will be launched in the UK in the first half of 2001, offering a wide range of holidays and travel-related products.

Mr Byrne says: ''This will allow us to form direct contact with our customers.''