Tui Travel Q3 results boosted by strong summer trading

Tui Travel Q3 results boosted by strong summer trading

Strong summer trading has helped Tui Travel grow quarterly operating profits by 57% to £88 million despite warning of "pressures" on the travel and aviation sector.

Europe’s largest operating group said differentiated product had performed well, particularly in the UK and Nordic regions, and that selling prices and margins continue to develop “in line with expectations” in all source markets except France.

Overall, volumes left to sell are in line with the prior year.

The figures for the three months to June 30 show revenue up by 13% to £3.7 billion with an underlying operating margin up to 2.3% from 1.7% in the same period a year ago.

UK bookings have remained “broadly stable” in spite of the “challenging” trading environment, the group said.

Load factors are ahead of last year for the remaining months of the summer season and selling price has improved by 4% year on year.

Short-duration holidays have proved more popular, with 10 to 11-night and seven-night stays rising by 24% and 4% respectively.

All-inclusive holidays have made up 46% of sales, up by two percentage points on last summer, while the proportion of online bookings has risen from 38% to 40%. This means that 1.3 million people have booked via the group’s websites for this summer.

Winter 2010-11 bookings from the UK are 9% down based on a 7% cut in capacity. The average selling price is 5% up, partly reflecting increases in fuel and accommodation costs.

Tui warned that the travel and aviation industry is facing a "number of headwinds", including the high cost of fuel, weakness of sterling and a slower-than-hoped-for recovery in the important North African tourist destinations, particularly for French operators.

"Like the rest of the industry we are not immune to these pressures," the company said. "Our market-leading positions, together with our ability to manager capacity due to the flexibility of our business model, mean that we are able to focus on maintaining margins and delivering operational efficiencies in these continuing challenging times."

Chief executive Peter Long said: “In the third quarter we achieved a strong performance in both our UK and Nordic businesses while all regions benefited from Easter falling in late April.

“This performance is particularly pleasing in the UK against a background of weak consumer sentiment.

“I believe that this is testament to our management team and our focus on exclusive and differentiated product which offers our customers quality, value holidays that are only available through our brands and sold principally across our own distribution channels.”

He added: “Having reacted quickly to the events in North Africa by moving capacity mainly to the Western Mediterranean we have been able to mitigate the impact of these events across all regions with the exception of France where many consumers are choosing to holiday within their own country.

“For the summer, our overall volumes left to sell are in line with the prior year and we are confident of meeting our expectations for the full year in what is a challenging trading environment.”


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