Main summer holiday still an ‘essential expenditure’
Monday, 01 Dec, 2009
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TUI Travel has recorded a 15% rise in annual profits – beating rival Thomas Cook which yesterday reported flat profit levels.
Europe’s largest tour operating group saw pre-tax profits rise to £366 million for the year to September 30, up from £319 the previous 12 months.
TUI said winter business continues to improve across all source markets while summer 2010 trading in the UK “remains encouraging” with average selling prices up by seven per cent year on year.
CEO Peter Long said: “Our customers’ behaviour has demonstrated that even against a backdrop of reduced consumer confidence, the main summer holiday is an essential expenditure.”
He added: “We have managed capacity carefully for the current winter season and as a result remain confident we can meet our broad’s expectations for 2010.”
Underlying profits from the UK and Ireland rose by £51 million in the year to September, up from £133 million to £184 million as merger synergies delivered £93 million-worth of savings, up by £64 million.
The outbreak of swine flu in Mexico cost the company £9 million in repatriation and compensation costs, increased cancellations and lower load factors when flying resumed to the country in May.
Booking levels in the UK have improved in recent weeks, TUI reported. Booking volumes in the past four weeks were down by four per cent compared to the cumulative position which is down 16%.
Capacity cuts mean there are 13% fewer holidays to sell in the UK with averaged selling prices up by 10% but margins flat year on year.
TUI is planning for capacity to be pegged for summer 2010, although the company said it retained the flexibility to adjust supply as demand develops.
The group indicated that it had the capability to be keen on price for next summer as its businesses are benefiting from “significantly” lower cost pressures than summer 2009.
This means that, unlike this year, TUI does not have to pass on substantial price increases to customers.
by Phil Davies
Phil Davies
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