TUI and Thomas Cook report strong sales

TUI Travel and Thomas Cook both showed strong sales in trading statements issued today.

Thomas Cook said package holidays were proving to be resilient and the strong position the company has created in the medium haul holiday sector is “proving particularly beneficial” in the current economic environment.

The group said it had the flexibility to adjust its products to meet consumer demand for summer 2009.

Thomas Cook revealed that 28% of bookings in the UK this year have been taken online with total tour operator bookings through the thomascook.com website up by 56% year-on-year.

The company was also benefiting from “significant” capacity reductions in the UK and Germany – including the capacity from the collaspe of the XL Leisure Group and other operators that have ceased trading recently.

The failure of XL had a positive effect on this year’s margin, Thomas Cook said. The company had 24% fewer holidays to sell in the UK than this time last year for the remainder of the summer period, with average selling prices seven per cent a head, and 15% ahead in the past four weeks.

CEO Manny Fontenla-Novoa said: “While early indicators for summer ’09 are encouraging, we continue to maximise our resilience for factors outside our control by flexing capacity in response to demand, managing our costs aggressively and hedging fuel and currency.

“In addition, the reduction in capacity as a result of the recent airline failures, including XL, has improved our outlook.”

He repeated Thomas Cook’s call on the government to address the consumer protection anomaly that leaves seat-only passengers unprotected whan an airline fails.

“Package holidays have always been, and continue to be, a core part of the group’s strategy and for the last 18 momnths we have focused on building a strong position in medium haul,” said Fontenla-Novoa. “This strategy is proving beneficial as the market for package holidays remains resilient and we build a strong share of the medium haul market.”

TUI said its summer 2009 programme was 12% sold with average charter selling prices up by 12%. The programme for this summer is 94% sold, three percentage points ahead of this time last last year with reduced levels of discounting.

“As a consequence of the capacity reductions and the strong rate of sale, we entered the ‘lates’ booking period with significantly less stock to sell, ” a TUI statement said.

“This has enabled us to reduce the level of discounting compared to prior years.”

Winter sales in the UK are three percentage points ahead of this time last year, with 33% of the programme sold. Average prices are 7% up on 6% less capacity.

“We remain confident that the flexibility within our business model will enable us to further adjust both flight and bed capacity if necessary in response to any weaker demand,” the statement said.

by Phil Davies