09 February 2010

TUI Travel suffers deeper quarterly loss

Difficult trading conditions led TUI Travel's losses to deepen by £72 million in the quarter ending December 31 last year.

The travel giant's underlying operating loss was £107 million against £35 million in the same three months a year earlier.

Group revenue was down by 8% to £2.533 billion.

The company said recent trading has shown improvements in demand for holidays.

The group also attributed the increased loss to a tough comparative period, particularly for winter holidays.

For summer 2010, TUI Travel plans a "measured" capacity increase of three per cent in the UK and Nordic region following increased demand, further differentiated holidays and an additional ship for Thomson Cruises.

Summer bookings from the UK are up by 40% while winter 2009-10 bookings and prices have continued to strengthen for the reminder of the season.

Chief executive Peter Long said: "Our flexible business model allowed us to manage the impact of the first full winter season since the height of the economic downturn by ensuring demand was in line with profitable supply.

"As anticipated, trading has been difficult, especially against a tough comparative period, but sustained improvements in demand over a number of months leave us more confident that the worst is behind us."

He said he expected "positive momentum" in each of the remaining quarters of 2010 as trading benefits from improved demand in all source countries, merger savings are delivered and the benefits of a strategic alliance with Sunwing in Canada and an exit from scheduled flying in Germany are realised.

"For these reasons, I remain confident that we can meet our board’s expectations for 2010," added Long.

UK winter season trading between November 22 and the end of January is running at just one per cent down with the cumulative position improving from 16% down to 11% down.

"This improvement is despite a period when adverse weather conditions led to reduced footfall on the high street which had an impact on sales through retail channels for three weeks when booking volumes were down 17%," the company said.

Average selling prices of winter holidays is up by the per cent year on year.

For summer 2010, the introduction of differentiated properties, strong growth in fly-cruises and adding flights from regional airports following competitor failures has led to the three per cent rise in capacity.

"We continue to monitor supply and demand and have retained sufficient flexibility to adjust capacity accordingly," the company said.

Summer trading for the period between November 22 and the end of January is six per cent up in the UK, giving a cumulative position of one per pent ahead. Average selling prices are up by nine per cent in recent weeks.

by Phil Davies