TUI Travel sees improving customer demand
TUI Travel cut its winter losses in the three months to the end of December to just under £35 million.
This compared to a deficit of £63 million in the same quarter the previous year, a 45% improvement.
The underlying loss in the group’s mainstream operating sector was cut by £28.3 million to £30.5 million helped by merger synergies and strong trading in central Europe.
The company said trading for both this winter and summer 2009 has strengthened since its previous update in early February.
TUI admitted there trading enviroment continued to be "challenging" although demand has improved in recent weeks.
"We continue to expect a flatter booking profile as some consumers continue to delay purchases due to uncertainty around their personal circumstances," the company said.
Winter programmes are almost fully sold, with strong trading in the late booking period, TUI said.
For summer, bookings from the UK have picked up from being 18% down to seven per cent down. Average UK selling prices are up by 10% and the load factor is only one percentage point behind last year at 45%.
Capacity reductions mean that there is 14% less content to sell for summer from the UK. Overall capacity from the UK has been cut by 17% "and scope exists to reduce this further if necessary".
Bookings in the last month for Turkey are up by eight per cent, Egypt by 18% and all inclusive holidays by 13%.
“Current trading for summer 2009 provides confidence that target load factors and average selling prices will be achieved,” the group said.
CEO Peter Long said: “Pricing is strong as we continue to recover our cost input inflation, while consumer demand continues to improve despite the economic conditions as our consumers continue to seek differentiated experiences with trustworthy brands that provide excellent value for money.”
He added that there is continuing greater demand for non-euro destinations and all-inclusive holidays.
A statement on the quarterly results to December 31, 2008, said that for the summer there has been stronger consumer demand in the past four weeks.
"Customers who delayed purchasing holidays in the early booking season have started to return to the market," the company reported.
"This improved demand, coupled with the further capacity cuts across our source markets, means that we have less product left to sell in all key source markets. This, along with the continued strong average selling prices we are achieving, leaves us confident that we will achieve our target load factors at the required margins."
The company revealed that discussions over a strategic co-operation between its German airline business TUIfly and Air Berlin are "progressing well" and have reached an advanced stage.
Seven businesses were acquired by TUI in the last three months of 2008 for almost £50 million, including the half share in Island Cruises owned by Royal Caribbean Cruise Line, five in the activity sector, a yacht charter firm in Germany and Travel Adventures in the US.
Phil Davies
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