UK main focus as MyTravel strives to rebuild profits
MyTravel has admitted that rebuilding profits to normal industry levels in the UK will take another two years.
At its annual general meeting today, the company said it was on course for making a profit across its three operating divisions next year and an industry standard margin of 3.5% in the UK in 2007.
In a trading update, the company – which last year won a battle with bondholders to avoid bankruptcy with an £800 million financial restructuring after incurring massive losses over successive years – revealed that UK capacity had been reduced by an unspecified amount this year, improvements were being made to its product offering and there continued to be a focus on cost control.
MyTravel said: “We have made significant progress in restoring the business, however a lot remains to be accomplished in the UK.”
The group revealed that the impact of the Asian tsunami disaster on Boxing Day, 2004, is likely to cost £2 million in the UK and £10 million in its Northern Europe division.
It is taking “mitigating actions” against high oil prices by purchasing jet fuel for the remainder of the financial year at a capped rate of $60 per barrel or $600 per metric tonne.
But the group added: “The longer the oil price is near to $600 per tonne over the period, the more difficult it will be to mitigate the effect of this through other actions.”
The agm statement added: “We have been encouraged by bookings for all three divisions for the summer. In the UK, as outlined above, we have reduced capacity significantly and begun reshaping our product.
“We have achieved close to the same number of brochure bookings as last year and we now have significantly fewer holidays left to sell than we had at this time last year. In Northern Europe, following a slight increase in capacity, bookings are also up slightly with improved margins. In North America, bookings are encouraging but still at an early stage.”
The company rejoined the FTSE 250 index on March 18 following completion of the financial restructuring last December, when trading began in new shares issued following the restructuring.
“This has created a strong foundation and momentum for the business,” MyTravel said. “Overall the Board continues to believe that we will be able to achieve our business plan for the year.”
MyTravel lost £190 million in the 13 months to October 31, 2004 following losses of £910 million the previous year.
Resolutions required for the capital reorganisation of the group were passed at an egm today.
Report by Phil Davies
Phil Davies
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