First Choice-TUI complete refinancing
First Choice and TUI have finalised a major refinancing ahead of their planned merger, which is due for completion on September 3.
A £1.2 billion credit facility has been put in place made up of a £770 million five year revolving credit facility and £430 million nine month bonding facility.
It replaces existing First Choice and TUI Tourism bonding facilities and is £200 million more than originally sought.
The trading statement coincided with TUI AG second quarter results which showed a 9.4% drop in turnover to 1.12 billion euros for the Northern Europe division, which includes the UK and Ireland.
Earnings were down 79 million euros year-on-year from a profit of 43 million euros to a loss of 36 million euros despite a 1.7% rise in carryings to 1.88 million, mainly driven by Thomsonfly’s seat-only business.
“This earnings trend was primarily characterised by the difficult situation in the high volume generating business and the resulting price pressure in the UK, which was augmented by drastic air passenger duties,” a TUI statement said.
“Trading in Northern Europe is expected to improve significantly in the second half of the year due to the market trend in the UK and cost savings.”
Overall TUI AG tourism revenues were down by almost 100 million euros or 67% in the quarter to 48 million euros against 145 million euros in the same period last year.
In a trading update, First Choice said mainstream holidays revenues for this summer are cumulatively up 6% on customer numbers up by 3%.
First Choice short haul sales continue to suffer and are 3% down with passenger numbers flat but the operator had cut capacity in this segement.
Long haul sales are 27% up with passenger numbers increased by 23% based on a capacity rise of 25%. Medium haul sales and passenger numbers are both up by 1%.
“Despite the encouraging rate of sale, margins continue to be adversely impacted by higher APD taxes and the year-on-year increase in fuel costs,” a statement said.
Revenues in the company’s online destination services sector are up by 42% with bednights up 25%. Laterooms.com is performing ahead of expectations with sales and bednights up 61% and 58% respectively, according to First Choice.
“The sector continues to grow as independent tour operators, travel agents and consumers, primarily through our successful partnerships with low cost airlines such as easyJet, seek access to our accommodation bed-bank,” the statement said.
Revenues are up by 3% in the activity holidays sector while strong demand for specialist holidays has seen revenues rise by 15% on volume growth of 13%.
Chief executive Peter Long said: “I am pleased with the way summer trading is progressing and we remain on track to meet our internal expectations for the full year.
“Capacty is being well managed and demand remains strong for our products across all sectors.
“The successful refinancing is a major step towards the launch of TUI Travel PLC and I am delighted with the support we have received from our banking partners.”
by Phil Davies
Phil Davies
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