MyTravel on course despite fuel price hike

MyTravel saw a “significant improvement” in performance in the six months to April.

The company, which finalised an £800 million debt for equity restructuring in December, said its group operating loss was reduced by 31% to £87.8 million from a a loss of £126.5 million in the same period a year earlier.

The group pre-tax loss was cut to £114.1 million against a loss of £177.9 million in 2004.

It is selling its interests in joint hotel ventures, Tenerife Sol and Palma-based Hotetur, for £38.5 million.

The half-year results follow a narrowing of winter losses at First Choice and an improved performance by Thomas Cook in the same period

MyTravel said the results came despite an adverse impact as a result of the Indian Ocean tsunami – £11.7 million – and a significant increase in the cost of fuel, calculated at – £17.5 million.

Breaking down its three divisions, MyTravel said:

*UK seasonal operating loss was reduced for the second year in succession to £123.9 million from £148.5 million. The group said more holidays were sold at full brochure prices leading to improved margins. The UK aircraft fleet has been trimmed from by 10 aircraft to 23 with an increase in medium and long haul flying.

*Northern Europe achieved a record operating profit of £14.2 million compared with £4.6 million.

*North America saw an operating profit of £23.1 million against compared £17.7 million.

The company described summer 2005 trading to date as “encouraging” for all divisions.

But the group admitted that trading improvements this summer are likely to be offset by fuel price increases estimated to cost £30 million.

“Despite this, the board believes that the full year’s results will be in line with its expectations,” a statement said. “We continue to target an operating profit for all three divisions in 2006 and an industry standard 3.5% margin in the UK in 2007.

The statement added: “In the UK, we have reduced our summer capacity and have 36% fewer holidays left to sell than we had at the same time last year. The expected increase in the proportion of brochure bookings is coming through and favourably impacting gross margin.”

Looking forward, the group said it continued to make progress against its business plan with “clear performance improvement in the UK, good performance in North America and excellent performance in Northern Europe”.

Chief executive Peter McHugh said: “We continue to make good progress against the targets set out in our business plan as evidenced by a 31% reduction in our winter group operating loss over last year. 

“Demand is strong for all of our products, across all divisions. We have an effective management team in place, and despite fuel price increases we remain on target to achieve our goals for this financial year. 

“Our strengthened financial condition will allow us to institute a more normal seasonal hedging programme over the next several months.

“Overall, while we continue to push for improvements in our UK performance, MyTravel’s recovery is on schedule. I am confident of our continued progress.”

Meanwhile, the group is investing in its online booking capabilities, resulting in Hitwise rating MyTravel as the sixth largest travel agency website in the UK in May. Subsidiary Direct Holidays claims to be taking 40% of bookings via the internet.

Report by Phil Davies

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