TUI announces record profit but cuts capacity
TUI Travel made a record operating profit in 2011 of £471m, up 18% on the previous year, but announced it was chopping capacity by 9% for summer 2012.
It said its record earnings in the UK for the year ended 30 September were due to increased sales of differentiated and exclusive product.
However, it admitted 2012 would be a tough year, sales are running 11% down year on year, forcing it to cut capacity by 9%. But it insisted it would not follow rival Thomas Cook into the doldrums, saying the package holiday in the UK was "still alive and well".
TUI chief executive Peter Long said: "We are very pleased with our robust performance in 2011 and have delivered another year of profit growth, against a backdrop of unrest in key North African destinations and weak consumer sentiment in some source markets.
“The UK, Nordic region, Belgium, the Netherlands, Canada and Austria delivered record results. These achievements reflect the strength of our strategy to increase differentiated and exclusive product sales, increase controlled distribution with a focus on online to enhance our customer access and reduce distribution costs, and our delivery of the turnaround and cost efficiency programmes.
"We remain focused on this successful strategy and through our new business improvement programme we have self help measures in place to help offset the difficult macro-economic environment, including clear plans in place for Germany and France.
“In addition, we continue to strengthen our cash flow in order to fund the dividend and growth. All of which means that, even in the current challenging market conditions, we continue to operate from a position of strength."
TUI announced a final dividend of 8p per share, resulting in a full year dividend of 11.3p per share, up 3% on 2010.
By Linsey McNeill
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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