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(30 September 2004)
A total of 3,200 staff within the tour operating, airline and retail divisions have entered a three-month consultation.
Sources estimate the cuts will save TUI UK between £40 million to £50 million, although TUI refused to comment.
Significant cuts are anticipated at the Specialist Holidays Group’s underperforming summer brands, which include Magic Travel Group, Crystal and Thomson Villas.
Shop staff are not involved although plans have been unveiled to reduce the retail network and shop leases will be reviewed as they expire. Industry sources predict shop numbers could be slashed from 800 branches to a figure nearer 500.
The shake-up will mean more bookings sold direct, less overseas reps and welcome meetings, and specialist summer brands.
The airline fleet is to be rebranded Thomsonfly, the name of its no-frills business, with investment in extra aircraft and in-flight refurbishment.
TUI UK managing director Peter Rothwell said the changes were to enable TUI UK to compete in a more competitive environment. "We want to boost the amount of holiday, flight seats and hotel rooms we sell through direct channels as this drives down our distribution costs," he said.
TUI has already announced the merger of TUI UK, Britannia and SHG under the TUI UK business, with one board. It will now scale back its presence at its London offices.
A Transport Salaried Staffs’ Association spokeswoman reacted: "We are stunned and shocked."
Many in the trade were unsurprised by the cuts which follow the axeing of five senior directors. First Choice MD of UK distribution John Wimbleton said: "Every business has to look at its shape."
All Leisure Group chairman Roger Allard added: "The market has changed and vertically integrated operators have to move with the times."
Other observers said the redundancies could signal cost-cutting among rivals. A source close to the company warned: "This isn’t just a Thomson issue, it’s one for all the big four. This is only the start."
Holiday Brokers chief executive Steve Endacott added: "It was MyTravel’s turn last year, TUI’s this year and I wouldn’t be surprised if it’s Thomas Cook’s and First Choice’s turn next year."
Meanwhile, a big four rival said: "TUI has ‘big company’ syndrome – it has 100 shops too many."
Independent Options business development director Sue Foxall said: "If it wants to sell direct then fine, we won’t bother selling its product."
The news comes in a black week for travel with the collapse of Golden Sun Holidays and 1,200 job cuts at P&O Ferries. Another operator was thought to be near collapse as Travel Weekly went to press.
