Europe’s biggest travel firm TUI Group
has defied the global economic turmoil by posting a 43% rise in full-year pre-tax profit rose to £319.7m.
It cited improvements in its profit margins due to cutting loss-making flights and selling holidays cheaper, as well as synergies created by last year’s merger of TUI AG and First Choice.However the group has reduced the number of holidays it is offering next summer by 16% from an earlier plan of 9% after booking volumes fell 17% behind the level seen this time last year, and in anticipation of consumers cutting back on holidays.
TUI Travel’s chief executive Peter Long said: “I can’t stand up and say we are just ignoring what is going on in the world, but we have the capability to adapt and trade through. What our customers are saying to us is that their annual summer holiday is important. With everything that is going on it is perhaps even more important that they take that break.”
He added: “I have been in this industry for 25 years. I’ve been through a couple of recessions and we are now facing the third. I’ve been through bird flu and 9/11, I’m industry-hardened.”
“The integration is progressing well and we are now targeting £175m of synergies, which is £25m higher than our previous target.”
Revenues rose 9% to £13.9bn in the year ended 30 September 2008, while dividend per share was up 16% to 9.7p.
But the economic downturn resulted in it cutting capacity for the UK market by 16% for summer 2009. This has meant volumes to date are 17% lower but average selling prices are 10% up year-on-year.
Long also said he has seen promising signs in early trading for the summer of 2009 in a further indication that the company is resilient to the economic downturn.