TUI issues more positive trading update

TUI Travel has released a more positive trading update today, claiming its summer, winter and 2011 sales are looking more healthy.

The travel giant, which announced plans for redundancies in the UK last week, said it has now sold the majority of its summer 2010 programme.

“This shows that demand for our holidays remains healthy despite the previously highlighted shift towards a later booking trend in the UK,” said chief executive Peter Long.

But TUI said the increased lates mix has affected profitability.

Long said the recent failures of smaller tour operators and airlines has prompted more people to book with a large operator.

“We have benefited from this flight to quality as well as the return to more normal weather conditions across Northern Europe after the earlier period of good weather.”

The update comes just a week after TUI issued a statement saying it was to make a raft of redundancies at its UK HQ, with hundreds of staff thought to be facing the axe.

The company told staff today that it needs to make a round of redundancies and will be “promoting the voluntary redundancy scheme” and “reviewing current vacancies”.

In today’s trading update, it said: “We continue to review areas of our cost base across our businesses and central functions to increase our competitiveness and further underpin delivery of our targets.”

It said looking forward, it retains its “prudent view” on the outlook for the coming financial year.

However, it said booking activity has accelerated across all source markets in recent weeks for winter 2010/11 and trading for summer 2011 has started well.

For summer 2011, booking volumes in the UK are 5% up on 2010, while bookings for its ‘differentiated’ product are up 17%.

It said it expects capacity to remain flat in the UK market.

“Furthermore, after a number of years where the UK business has had to pass through significant cost inflation (driven by fuel, currency rates and departure taxes) summer 2011 is expected to have minimal cost inflation, (based on achieved hedged rates and current forward rates),” it said.

TUI will announce its preliminary results for the year ended 30 September 2010 on 2 December 2010.

By Bev Fearis