The 100-day review by TUI Travel boss Peter Long has identified an extra £50 million a year in savings from combining the TUI and First Choice businesses, taking savings to £150 million a year from 2010.
The UK mainstream division will provide £40 million of the added savings from more efficient network planning, catering and maintenance at the airline, more efficient buying and marketing, and through the move to a single selling system.
The full savings should also come through more quickly than previously announced, being completed within two years. But the total cost of merging the businesses has also risen – from £130 million to £180 million.
Long described current trading as encouraging, especially after Christmas, with UK mainstream sales “significantly ahead of last year”.
He said the group has been unaffected by a fall in high-street spending. “We have not seen a consumer downturn,” Long said. “We have fewer holidays left to sell and are not struggling to sell them.”
UK mainstream sales for the current winter are 3% up year on year and summer sales up 8%, he revealed.
However, he conceded sales of short breaks may be affected and there could be more demand for seven-day than 14-day breaks in the late-booking market.
Long said: “We are trading strongly as a group and will ensure airline capacity is in line with tour operator demand.”
The group has signed a memo of understanding with Lufthansa to merge TUIfly in Germany with Lufthansa low-cost subsidiary Germanwings. The pair aims to operate a joint network in Germany from late summer 2009.
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