Travelport has shelved plans for a £1.2 billion float on the London Stock Exchange due to the continuing weakness of the IPO market.

The US airline and hotel reservations company cited ‘volatility’ in world markets for the abrupt withdrawal. The move will also serve as a dampener to Travelport’s owner, the Blackstone group, which is also planning to list another of its prized assets next week, Merlin, the operator of Madame Tussauds and Legoland.

Blackstone had already agreed to lower the price for the IPO of Graham Packaging, the US plastic container maker, for a second time.

Jeff Clarke, Travelport’s chief executive, said it would re-evaluate the situation when markets had stabilised: “Since we announced our intention to float there has been significantly increased volatility and uncertainty in global equity markets as a result of macro circumstances unrelated to our business… We will consider bringing it back to the market at a future date, when equity market conditions are more favourable.”

Travelport would have been the biggest in London for almost two years. However, the launch was struggling to win the support of investors.

The deal, arranged by Barclays Capital, Credit Suisse, Citi, Deutsche Bank and UBS, was due to close today.

According to Reuters, Travelport had also cut director and staff bonus packages. But investors felt that the changes had not gone far enough and failed to ease more fundamental reservations about the company.

Blackstone led a buyout of Travelport, which runs the Galileo booking system for travel agents, airlines and hotels, from Cendant in 2006 for $4.3 billion. It was merged with Worldspan to expand its reach in America. Orbitz, the group’s online travel arm, was created a year later.

Blackstone, which owns a 70 per cent stake in Travelport, put in $775 million in equity and has already extracted a healthy return, collecting most of a $1 billion special dividend in 2007. Fellow shareholders in Travelport include Technology Crossover Ventures, One Equity Partners and the company’s management.