Tui bucks recession to post profit

Tui bucks recession to post profit

TUI Travel has bucked the global downturn and reported an 11% increase in underlying operating profit to £443m for the year ended 30 September 2009.

Europe’s biggest tour operator’s revenues stayed the same at £13.8bn, while underlying earnings per share increased 17% to 23.8p.

Its announcement follows that of Thomas Cook’s (November 30), which reported underlying pre-tax profits for the year to September of £308.2 million.

Peter Long, chief executive of TUI Travel, said: “We are very pleased with the performance of the group in the second year as a merged company.

“Despite the challenging economic environment we have delivered strong earnings growth, demonstrating the resilience of our business model and the effectiveness with which we have delivered merger synergies.

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“Our customers’ behaviour has demonstrated that even against a backdrop of reduced consumer confidence, the main summer holiday is an essential expenditure.

‘We have managed capacity carefully for the current winter season and as a result remain confident that we can meet our board’s expectations for 2010.

“Our progress to date in delivering our strategic imperatives, particularly the transactions announced in Canada and by TUIfly, gives me confidence we can achieve the margin roadmap we set out at our January 2008 investor day.”

TUI said it has delivered £120m of ‘synergy benefits’ and was aiming to hit its £200m target by 2011.

It said trading for winter 2009/10 continued to improve in all markets, despite challenging trading conditions.

Capacity reductions at the start of the year saw 13% fewer holidays left to sell in the UK with prices up 10%.

Summer 2010 UK trading remains encouraging, with load factor in line with the prior year and average selling prices now up 7% year-on-year.

TUI said the price increase is mainly due to a shift away from short-haul to mid- and long-haul destinations, in a similar strategy to that of Thomas Cook.

Bookings are down 3% and TUI is planning flat capacity for the season.

TUI described summer 2009 as a ‘pleasing performance against the backdrop of exceptional fuel and currency driven cost inflation as well as the challenging economic environment’.

TUI said its focus for winter 2009/2010 is on achieving prices and load factors.