Co-op Travel back to profit in first half

The Co-operative Travel achieved profit before interest of £7.9 million for the half year to July, but said it remains cautious about the second half.

The profit was a marked improvement on the same period last year, when the group broke even.

But managing director Mike Greenacre said he remains cautious because the industry faces huge challenges.

“The financial issues of the last few weeks have created major concerns about investments and savings amongst the majority of the population,” he said.

“Continued falling house prices, increases to domestic fuel bills and the instability of the cost of oil will all also have an impact on consumers’ holiday plans.

“This position has been further undermined by the collapse of XL, although our retail network has seen thousands of customers rebooking holidays from many of the failed XL brands citing the financial security and stability of our historic brand as a major factor.

“I am determined to fight hard for consumers to ensure that the Government and the CAA move quickly to extend financial protection for all forms of booking and travel, and we shall be making huge noises about risks for travellers in all our trading groups.”

He said the Co-op Travel team has been focused on integrating Travelcare following the merger in July 2007.

“Together we have worked tirelessly to extract all the synergies and cost savings that a merger of this size presents.

“With the market place showing significant changes in the past six weeks or so, we will need to use all of our considerable resource to achieve our year end goals.

“When we announced our 2007 full-year figures in April, we made a commitment to bring this business in to profit by the end of 2008, and we are well on target to achieve that goal.

Director of retail distribution Trevor Davis said the retail side had performed well thanks to the “commitment of front line staff”.

“Travel Retail is the first division of the Co-operative Group to be completely re-branded and this has played a major part in increasing our profile on the high street. I believe that our retail network is in good shape to continue our strong trading performance throughout the remainder of this year,” he said.

Within its direct business, including Future Travel, call centres and the internet, the group said a major programme of change is now well advanced.

Future Travel Homeworking recorded a 49% increase in profitability, and independent consortium The Freedom Travel Group made solid progress as well with a large increase in membership.

Strategic changes were also made within the Wholesale Division, and particularly in the area of Dynamic Packaging.

The group’s statement said tour operating plans have made good progress and are on target to be launched in early summer 2009.

Commercial director Shaun Hinds explained: “The tour operating landscape has changed dramatically over the last year. We are unique in our distribution diversity and strength and our in-house products will continue to grow and expand as our own tour operating capabilities are developed in the second half of the year.”

The group said its travel management arm had performed particularly strongly, helped by the acquisition of Parador Travel adding a “much-needed London base”.

By Bev Fearis