TUI Travel, Europe's biggest tour operator by market share, has benefited from the difficulties facing struggling rival Thomas Cook and reported record profits after a year of strong demand for holidays in the Nordic countries, northern Europe and Canada.
The company, which operates under Thomson and First Choice, swung back into profit at the pre-tax level in the year to September 30 and generated record levels of cash. TUI serves around 30 million customers and operates in 180 countries.
"Even in the current challenging market conditions, we continue to operate from a position of strength," chief executive Peter Long said yesterday.
"We have self-help measures in place to help offset the difficult macroeconomic environment, including clear plans for Germany and France," he said, without providing further details.
TUI Travel said operating profit rose 18% to a record £471 million. Market forecasts ranged between £383m and £493m, with an average of £461m, a Thomson Reuters IBES poll showed.
TUI Travel, majority-owned by German group TUI AG, said it had achieved record profits in Britain, the Nordic region, Belgium, the Netherlands, Canada and Austria, despite a backdrop of unrest in key North African destinations and weak consumer sentiment in some key markets.
The group has reduced capacity in the UK after it moved aircraft out of British airports to meet the higher demand in its markets in Canada and Scandinavia.
Thomas Cook has endured a difficult year so far and faces an uncertain future as it battles to regain the confidence of holidaymakers and investors after securing a rescue package from its lenders.
Analysts at Royal Bank of Scotland said TUI's performance was strong in a challenging year for the consumer generally and especially for holiday companies faced with social unrest in the North African market.
Royal Bank's analysts added in a research note that they expected TUI Travel to benefit from Thomas Cook's distress in the critical post-Christmas trading period when the majority of customers book their holidays.
There was also some cheer for shareholders as TUI announced a 2.6% increase in its final dividend to 8p a share, bringing the full year pay-out to 11.3p.
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