TUI Travel and Thomas Cook defied the gloom by reporting soaring operating profits and sharp rises in margins in the UK over the past year.
But Europe’s leading travel groups have cut further capacity for next summer as the outlook deteriorates.
TUI Travel chief executive Peter Long hailed “a renaissance in package tour operating” as he announced group underlying profits up 43% on 2007 to £329.7 million for the year to the end of September. UK profits rose £76.5 million to £133 million and the average margin on UK sales to 3.9%.
Thomas Cook reported a 50% rise in group operating profit to £366 million and an average sales margin of 4.2% for the same period – a margin chief executive Manny Fontenla-Novoa described as “industry leading”.
The UK delivered £143.4 million of Thomas Cook profits, 95% up on a year ago, despite a 1% fall in UK revenue to £3.1 billion. Fontenla-Novoa forecast a further growth in margin in the current financial year and predicted annual group profits would hit £480 million in 2009/10.
However, he announced a fresh cut in UK capacity for summer 2009 – now 11% down on this summer. Fontenla-Novoa suggested overall capacity from the UK next year could be 25% down on 2007.
Fontenla-Novoa said projected savings from the merger with MyTravel had risen from £155 million to £215 million.
TUI Travel also reported additional savings of £25 million from integration with First Choice – taking total savings to £175 million. Most of the added savings will come from the UK as a result of improved airline planning.
Long said average UK selling prices were up 10% for both this winter and summer 2009, with capacity for next summer down 16%.
He added: “We are trimming capacity for long-haul and shifting capacity into Egypt. There is a consistent pattern for Egypt and Turkey and weaker demand for the Caribbean and Florida.”
