A shift towards late sales has hit profitability at TUI Travel, which is continuing an across-the-board review of costs.
However, Europe’s largest travel group said it was benefitting from a “flight to quality” following the collapse of smaller operators and airlines.
The company reported strong late booking levels for the end of the summer season, which runs until the end of October, “but the lates mix has affected profitability”.
In a trading statement chief executive Peter Long said: “We are also continuing to review areas of our cost base to increase our competitiveness and further underpin delivery of our targets.”
Additional charges for “certain restructuring costs” are expected to be incurred.
Reporting strong demand for its own-brand, or “differentiated”, holidays in the coming winter and good early demand from the UK for summer 2011, chief executive Peter Long said:
“The failure of a number of smaller tour operators and airlines has once again emphasised to holidaymakers the security that travelling with a leading tour operator brings.
“We have benefited from this flight to quality as well as the return to more normal weather conditions across Northern Europe.”
He added: “The positive trading trends for future season have continued. Booking activity has accelerated across all source markets in recent weeks for winter 2010-11 and trading for summer 2011 has started well.
“Demand is particularly strong for our differentiated products, validating our strategy of offering unique holiday experiences.
“However, whilst these trends are encouraging, at this relatively early point in the booking cycle we retain our prudent view on the outlook for the coming financial year.”
The company is launching new concepts such as Thomson Couples in the UK and further increased co-operation between source markets such as marketing the Sensatori, Splash and Holiday Village concept the Nordic region.
TUI said winter load factors from the UK stood at 31% at a relatively early stage in the booking cycle, with total mainstream customers up by 7% based on sales up by 17%.
Summer 2011 bookings from the UK are 5% up year on year, with differentiated holiday volumes up by 17%. Capacity for next summer is expected to be flat.