TUI Travel reports profits boots

TUI Travel today said UK and Ireland profits more than doubled after it axed loss-making routes and cut costs in last year’s First Choice merger.

The division delivered a £76.5m (€91m) improvement in underlying profits to £132.9m (€159m) for the year to September 30, helped by a 43% reduction in loss-making flying capacity during the summer season.

Capacity was also rationalised in its charter programme, mainly in the short haul destinations of the Balearics, mainland Spain and Portugal.

Across the group, which was created through the merger of First Choice and the travel arm of German firm TUI, underlying pre-tax profits for the year rose 43% to £319.7m (€383m). Revenues were 9% higher at £13.9bn (€16bn).

In line with guidance issued earlier this month, TUI said winter bookings were progressing well, with capacity cuts resulting in a 10% rise in average selling prices and fewer holiday left to sell in key markets.

It described early trading for next summer as encouraging.

Chief executive Peter Long said: “Our customers continue to regard their main holiday as an essential, not a luxury, which they are reluctant to forgo.

“More than ever, they want to book their holidays with trustworthy brands that provide excellent value for money.”

The Thomson owner said today’s results also reflected strong trading in Germany and France, as well as cost savings after the merger with First Choice.

It is now targeting £175m (€209m) of cost savings and synergy benefits, which is £25m (€30m) higher than its previous target. Part of the additional gain stemmed from changes to airline network planning.

Changes since the merger have included the integration of its UK airline brands under the Thomson Airways brand.

It has also launched a combined reservation system for the summer 2009 season, consolidated its UK mainstream call centres and relocated UK airline and tour operating support functions to its new UK head office at Luton, Bedfordshire.