TUI Travel reports fall in revenue for first quarter

TUI Travel has reported an 8% fall in revenue for the first quarter results ending on December 31, 2009.

The fall in revenue has led to an increased underlying operating loss of £72 million which is being blamed on the tough competitive period and the impact of greater capacity reductions as the shoulder season is trimmed.

However, TUI Travel chief executive Peter Long remains confident that the rest of the year will see the vertically integrated operator’s fortunes improve.

He said: “Our flexible business model allowed us to manage the impact of the first full winter season since the height of the economic downturn by ensuring demand was in line with profitable supply.

“As anticipated, trading has been difficult, especially against a tough comparative period, but sustained improvements in demand over a number of months leave us more confident that the worst is behind us.

“I expect positive momentum in each of the remaining quarters in 2010 as trading benefits from improved demand in all source markets, merger synergies are delivered and the benefits of our strategic venture in Canada and our exit from scheduled flying in Germany are realised.

“For these reasons, I remain confident that we can meet our board’s expectations for 2010.”

Better profitability is expected in the second quarter due to improved trading trends, reduced volume reductions, the exit of scheduled flying operations in Germany and the completion of the strategic venture with Sunwing in Canada.

In the UK the situation has continued to improve since the end of September and the last trading update with booking volumes only 1% down. This has improved the cumulative position from minus 16% to minus 11%.

In the UK the average selling price for winter 2009/10 is up 10% although sales have dropped by 2% and customer numbers are down by 11%.

Summer 2010 has seen an increase in the average selling price of 9% while sales are up 10% and customer numbers up 1%.

Summer capacity is up by 3% thanks to the introduction of differentiated properties, strong growth in fly cruise product and capacity growth in some regional airports where the operator was either under represented or the failure of competitors has created opportunities.