MyTravel to launch ‘no-frills’ airline

Wednesday, 22 May, 2002 0

MyTravel has announced details of its plans to break into the low fares airline market as it revealed a “very poor performance” for the Group in the first quarter 2002.

Last month the company denied that it was to set up a no-frills airlines saying that it was keen to pursue “seat-only” sales for holidaymakers.

As it announced its interim results for the six months ended 31 March 2002 earlier today, the company said that it intends to move a small number of its existing aircraft fleet from their charter operations into a low fares airline operating out of “a major UK airport”.

When asked whether this was an admission that the the no-frills airline businesses are starting to hurt MyTravel’s core business of package holidays, Tim Byrne, Chief Executive of MyTravel Group, said that is simply not the case as the relative size is not comparable. He said that if you look at air travel to the Balearics this summer, the low-cost of airlines will be taking about 160,000 passengers, whereas the charter airlines will be taking about 4 million.

However, Mr Byrne continued, “What we do think the no-frills airlines offer is flexibility and the choice for people to take holidays of mixed durations, and that’s what we want to be a part of.”

When asked whether MyTravel was coming to the no-frills table a little late, Mr Byrne said: “The truth is, we offer the lowest fare proposition to customers on leisure routes. We’ve been doing this for ten years – we sell 2 million one-way trips to customers every year; they’re of fixed duration, and what we’ll do now is we will offer people more flexibility in terms of the amount of time they want to go on holiday.”

In addition, MyTravel announced plans to launch an interactive digital TV channel later this year on Sky allowing customers to book holidays direct. The channel will be called MyTravel TV.

The plans came as MyTravel showed pre-tax losses for the half year to March 31 widened to £157 million from £97.6. Turnover fell by 18.5% to £1.727 billion from £2.118 billion in 2001.

Commenting on the results for the period and the trading outlook Mr Byrne said: “The unprecedented and tragic events of 11 September in the United States left the travel industry and the world economy in an uncertain position going into the winter period, resulting in a very poor performance for the MyTravel Group in the first quarter. We also saw substantially reduced advanced bookings during the first quarter for holidays for this summer.

“Recouping the increased first quarter losses has always depended upon recovering the shortfall in family bookings at brochure prices, particularly for the UK peak season. To date, we have not recovered this shortfall and can therefore no longer be confident of recovering all the increased first quarter losses. We were pleased to see an improvement in our performance in the second quarter and we believe the actions the Group has taken to reduce costs and capacity will ensure that we also deliver an improved performance year on year in the second half.

“A return to more normal trading and booking patterns, together with the efficiency measures we have taken to date and our plans for top line growth announced today, provide significant opportunities for profitable growth in 2003 and beyond.”

Summary of turnover and operating results

2002

	2002		2001
	Turnover £m	Operating Result* £m	Turnover £m	Operating Result* £m
UK	830.8	(87.6)	938.1	(50.8)
Northern Europe	419.1	(17.6)	518.4	(7.4)
Germany	182.4	(18.3)	302.2	(25.0)
North America	280.1	0.7	340.0	4.3
Hotel & Retail JVs & Associates	15.1	0.5	13.8	1.5
Discontinued businesses	–	–	5.9	–

	1,727.5	(122.3)	2,118.4	(77.4)