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Tui Travel ready to take out capacity for the coming seasons

Home » Europe » Tui Travel ready to take out capacity for the coming seasons

Published: 14 Aug 2008

Tui Travel has posted strong results with Group underlying operating profit up by £18.4m and £89.2m for the third quarter and nine-months respectively.

The company shared that demand for package holidays remains strong despite the strong euro and the economic downturn.

However, Tui has decided to reduce supply in the UK by 21 percent in winter 2008/9, while summer holiday packages would be cut by 15 percent in Britain.

Peter Long, CEO, Tui Travel PLC said customers continue to place enormous value on their holidays.

"We are seeing no evidence to suggest that demand is slowing for any of our seasons on sale. In addition, we are currently recovering input cost inflation for all open seasons across our source markets," he said.

"While the evidence to date suggests that consumers view holiday spending as a high priority, we continue to prepare the business to deal with any consequences of the current economic climate. Accordingly, we are taking out capacity for the coming seasons where it makes sense to do so and retain significant flexibility to adjust supply further if demand trends change. The diversity of our portfolio of businesses provides further protection from risks arising from specific geographies or products. Next year will also see substantial merger synergy benefits delivered, based on work we have already completed," added Long.

Long stated that the Group is well hedged with respect to fuel and foreign exchange exposures for all open Seasons.

"We continue to believe that we are well placed to recover incremental costs in both financial years 2008 and 2009," he said.

Revenues at Tui, formed last year by the merger of First Choice and Germany's Tui tourism business, grew by nine percent in the third quarter to June 30 as underlying profits rose 39 per cent to £65.4m. In the nine-month period, revenues were up nine percent to £8.77bn, with underlying profits up by a third to £185m. The underlying operating margin rose 0.4 percentage points to 1.8 per cent. Tui also reiterated that it was on track to achieve £150m of synergy benefits following the merger.

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