TUI Travel, which operates the Thomson holidays business, yesterday posted stronger third-quarter profits and said trading in the UK was "buoyant".
TUI Travel, which operates the Thomson holidays business, yesterday posted stronger third-quarter profits and said trading in the UK was "buoyant".
TUI said profits for the quarter rose by 39% to £65.4m and said there was no evidence that consumers were trading down or curtailing their holiday plans because of current economic conditions.
The UK business, which is part of the German-based TUI shipping and travel group, is planning to reduce capacity by 21% for this winter and by 15% in summer 2009, with rising fuel costs offset by operating six fewer aircraft in the winter and 11 fewer planes next summer.
The company said strong consumer demand and the elimination of loss-making capacity meant there were "significantly fewer" holidays left to sell in the lates market this year. As a result, the average selling price for the season is around 15% higher than a year earlier.
TUI said trading for all seasons, especially in the UK, continued to be "buoyant", despite the economic conditions. UK sales rose 5% for summer 2008, with the average selling price ahead by 13%.
"Our customers continue to place enormous value on their holidays and we are seeing no evidence to suggest that demand is slowing for any of our seasons on sale," chief executive Peter Long stated.
Luton-based TUI was created through the merger of First Choice and the travel arm of German firm TUI last summer. Around 37% of its profits are generated from the UK, with the bulk of the rest coming from mainland Europe.
Meanwhile, TUI's German-based parent company beat analysts' estimates with a sixfold rise in earnings in the second quarter. The group said margins in its container shipping business, which it is selling, rose, while consumer demand for holidays held up in the face of a Europe-wide economic downturn.
TUI said underlying group earnings before interest, tax and amortisation (EBITA) rose to 216m (£171.5m), above the highest forecast of 189m in a poll of analysts. Sales rose by 20% to 6.25bn.
"TUI continues to expect a significant increase in underlying earnings by each of the two divisions, tourism and container shipping, for the year as a whole," the company said.
TUI said the process to sell its Hapag-Lloyd shipping unit was on track and the bidding process was expected to close by autumn at the earliest.
Chief executive Rainer Feuerhake told investors that TUI would not sell Hapag-Lloyd unless the price was right.
