The recent devaluation of the pound is one of the key causes of TUI Travel’s £289 million operating loss for the first half of the year.
Revealing the interim results for the first six months to March 31, TUI Travel chief executive Peter Long said the loss, which is a 15% increase on the same period last year, came from revenues of £5.4 billion.
This was partially driven by a £30 million loss due to the weak pound, while the timing of Easter, which this year fell in the second half of the financial year, also proved detrimental.
Long said: “TUI Travel has delivered a first-half performance in line with our expectations, while continuing to deliver our key strategic goals and synergy targets.
“Despite the ongoing economic weakness, we are encouraged by trading patterns and consumer sentiment across the group.”
Long’s optimism is illustrated by the UK 2008/9 winter season, which closed flat on sales, despite a 10% drop in customers. This was largely thanks to the average selling price being 11% ahead of that of the same half in the previous year, following a 9% cut in capacity.
He added summer 2009 remains consistent with the trend for later bookings, with sales for the UK down 5% in the last two weeks, as opposed to 10% in the last eight weeks.
However, Long said the booking levels for the last two weeks would actually have been 5% up, had the vertically integrated operator not had to take into account cancellations of Mexico trips due to swine flu.
Overall bookings for summer 2009 in the UK remain 16% down, although average selling prices remain 9% ahead of last year, leading to a 9% reduction in overall sales.
Capacity has also been cut by 17% for summer 2009 in the UK market.
Long said: “We are encouraged that the improvements in demand experienced in February and March trading have continued into April and May, despite the ongoing economic weakness.
“We continue to expect a flatter booking profile in the current market. However, the strength of the lates market in winter 2008/9, where we achieved strong pricing and target load factors, combined with having significantly less product to sell, gives us reason to be confident.”