UPDATE: TUI Travel Trades In Line; Bookings Leveling Off
05 Febbraio 2009 - 1:28PM
Dow Jones News
TUI Travel PLC (TT.LN) Thursday said it expects to meet
fiscal-year trading expectations, even though bookings appear to be
leveling off.
"Despite the challenging trading environment and an anticipated
flatter booking profile, we are achieving our load factor and
margin targets due to our ongoing management of capacity, and we
expect this to continue through the summer season," the company
said in a statement.
Chief Executive Peter Long told reporters that TUI Travel's
focus remains on managing its capacity to protect margins. "We are
getting the supply and demand equation right," he added.
The company already has reduced capacity by 17% compared to a
year ago, and Long described that level as appropriate, adding: "I
don't think we will see any significant movement on that
capacity."
He said economic recession across Europe and fears of job losses
meant that consumers were "watching and waiting," delaying
bookings. Still, he said TUI Travel's own research suggested 87% of
consumers still planned to take an overseas holiday this year, the
same percentage as last year.
Of that 87%, Long said 94% planned to take package holidays, up
from 75% a year ago, and the anticipated decline in those consumers
booking independently was "not surprising."
He suggested the high-profile bankruptcies of several tour
operators recently that had left thousands of tourists stranded
abroad and out of pocket had benefited TUI Travel and other U.K.
holiday companies that held Air Travel Organizer's Licenses. ATOL
is a financial protection plan managed by the Civil Aviation
Authority.
TUI Travel, Europe's largest travel group by sales whose brands
include Thomson and First Choice, said demand for all-inclusive
holidays was significantly ahead of last year, but it didn't
provide figures.
Long said all-inclusive packages were attractive because they
allowed holidaymakers to control costs.
TUI Travel said sales in its activity sector were down 19%,
primarily due to weaker demand in the U.S.
In the U.K., average selling prices have strengthened 11% over
the past 10 weeks, which the company said remained significantly
ahead of cost inflation at about 6%. Demand remained strong for
medium-haul destinations, such as Turkey and Egypt. Destination
choices appear to have been influenced by the weakness of sterling
against the euro and U.S. dollar.
It said it was encouraged by early trading in Germany, where a
capacity reduction of 14% had resulted in a 15% rise in average
selling prices.
TUI Travel, which was created in 2007 through the merger of
Germany-based TUI AG's (TUI1.XE) travel division and First Choice
of the U.K., said its integration program was progressing in line
with expectations and delivered about GBP30 million in synergies in
the fiscal first quarter.
It remained confident of delivering at least GBP100 million in
synergies in the fiscal year ending Sep. 30, 2009.
At 1140 GMT, TUI Travel shares traded up 10 pence, or 4.6%, at
235 pence. It was the second-biggest gainer on the FTSE 100, which
was up 0.1%.
"Whilst we are encouraged by the delivery of synergies, we are
mindful of the deteriorating macro environment and the likely
deferral of bookings, which increases the risk surrounding current
year earnings," said Collins Stewart in a research note. It rates
TUI Travel sell and indicates fair value at 170 pence.
Company Web site: www.tuitravelplc.com
-By Jonathan Buck, Dow Jones Newswires; +44 207 842 9237; jonathan.buck@dowjones.com
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