Up to 1,000 travel jobs at risk as Tui cuts back
A report in the Guardian in the UK says that the new German owner of the holiday firm First Choice is to close 100 of its UK travel stores with the possible loss of 1,000 jobs even though sales are booming.
The cutbacks come six months after Tui Travel bought its rival in a £12bn merger and are part of a drive to save £150m a year by 2010 – 50% higher than the savings talked about during the takeover.
Shares in Tui soared 5.5% in early trading on the back of the larger savings package and the upbeat assessment of future prospects of the business at a time of a slowdown in consumer spending.
Tui has already ditched a number of its UK flights on loss-making routes under the Thomson banner and says further cuts in package holiday capacity are on the cards to reduce overheads. A memorandum of understanding has been signed with the German airline Lufthansa’s Germanwings business with Tuifly, one of its aviation businesses.
Peter Long, chief executive of Tui Travel – and former boss of First Choice – said 65% of the company’s turnover was still making profit margins below 1% and the new measures would lift the overall group margin level to 3.5%.
But he insisted the company would also expand through acquisition and organic growth in activity and specialist holidays. “We always said the merger was about growth as well as synergies,” he said.
The closure plan is the latest to hit the travel industry following Thomas Cook’s announcement last June that it would cut about 2,800 jobs by the middle of this year. The restructuring included the closure of 150 shops and six offices, following the firm’s £8bn tie-up with the former Airtours business MyTravel.
There was no comment from Tui on how many UK jobs would go but trade union leaders reacted angrily.
Gerry Doherty, general secretary of the TSSA travel union, said the closures could cost up to 1,000 jobs and reduce competition. “We warned last year that this merger would mean less choice for consumers and job losses for our members. Sadly, this has come to pass.
“Britain’s high street is now dominated by just two travel giants: Tui and Thomas Cook. We fear more closures as the two firms maximise profits and pressure intensifies from internet holiday bookings.”
The merger between First Choice and Tui created Europe’s biggest travel group with 48,000 staff and 27 million customers. The company said on Tuesday that UK summer package holidays for 2008 were up by 8% with 18% left to sell, while sales this winter had risen by 3%.
Long expected no slowdown despite trouble elsewhere in the high street. “Over the last 20 years, GDP [gross domestic product] has had no bearing on overseas holiday bookings,” he said.
Shares ended the day up 1p at 240p.
A Report by The Mole from The Guardian
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