TUI Travel raises capacity

Hotel News - 18/02/2010

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TUI Travel, Europe’s biggest tour operator said it has seen significant enhancement in profitability in recent weeks and was putting more summer holidays on sale to meet the augmented demand. This group was formed in 2007 through a link between TUI AD’s (TUIGn.DE) and Britain’s First Choice, who had reported a first quarter operating loss but said it had shown signs of betterment in the second quarter.

TUI Travel (in which Germany’s TUI AG holds a 43% share) said trading had been particularly strong in Britain and the Nordic countries, which have seen increases in summer 2010 bookings of 6% and 40% respectively. CEO Peter Long stated that a continued improvement in demand had left the group confident that the worst was behind them. He added that the harsh winter in Britain had encouraged holidaymakers to book for the summer.

TUI Travel and adversary Thomas Cook TCG.L have reduced the number of holidays they sell by more than a quarter in the last two years, facilitating them to increase the average sell prices and avoid having to offer huge last minute discounts on unwanted holidays. This tactic aided both groups to uplift profits and margins through the recession. However, TUI is now adding a capacity in the UK and Nordics in light of the strong trading in those regions.

The group reported an increased operating loss of 107 million pounds in the quarter to December 31, compared with a 35 million loss the previous year. Tour operators, normally, run at losses in the first half of the year, which does not include the key summer period.

TUI Travel said it had faced a tough comparative period as the first quarter in 2009 had come before the worst impact of the recession and had benefited from Britain’s third biggest holiday firm XL Leisure going into administration. They affirmed that it was confident of meeting expectations for 2010. The consensus forecast for full-year pretax profit currently stands at 352 million pounds according to a poll of 20 analysts.

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