TT. Tui Travel

Europe's largest travel operator, TUI Travel PLC (TT.LN), Tuesday said it expects full-year results to be lower than expected after being left with more product to sell and negative impact from foreign exchange translations.

"The strong booking trends experienced up until the volcanic ash disruption in mid-April and the subsequent rebound in early May were not sustained throughout the early summer period," Chief Executive Officer Peter Long said.

The company said the later booking pattern in the U.K. source market means it has more holidays left to sell, which in turn means that margins will be lower than its targets and negatively affect U.K. profits. It also suffered a GBP3 million negative impact on results from foreign exchange translations.

Revenue in the three months to June 30 was GBP3.42 billion, compared with GBP3.58 billion. Over the nine months to June 30, revenue fell to GBP8.22 billion from GBP8.95 billion a year earlier, while pretax loss widened to GBP540 million from a loss of GBP411 million a year earlier.

For the summer 2010 season in the U.K., cumulative bookings up to Aug. 1 rose 2%, with average selling prices up 10%.

Booking volumes for summer holiday season have been strong across its source markets over the past 12 weeks with exception to the U.K. and Netherlands.

It said its winter 2010/11 and summer 2011 trading has "started positively."

Having to run an airline to complement its holiday business has meant that TUI Travel has also been hit by the disruptions caused by volcanic ash and the closure of airspace.

Over the past three months, TUI Travel's shares have shed 7.5% of their value, closing Monday at 226 pence.

-By Kaveri Niththyananthan, Dow Jones Newswires; 4420 7842 9299; kaveri.niththyananthan@dowjones.com

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