TUI profit growth is better than forecast

TUI has reported a 5% jump in UK customers year-on-year, despite the impact of the June Tunisia terror attacks.

It helped the travel giant achieve a 15.4% rise in underlying EBITA (earnings before interest, taxes and amortization) to €1,004m, better than it had expected.

It had previously forecast a rise of between 12.5% and 15% for the year ending September 30.

It expects to deliver at least 10% growth in EBIDTA over the next three years to 2017-18.

TUI, which is one week away from the one-year anniversary of its merger, said it was on track ‘to deliver our plans for tourism growth, maximise the growth and value of our other businesses and deliver merger synergies, with a focus on balance sheet strength, flexibility and strong free cash flow generation’.

But chief executive Peter Long said it had also been a year where he had witnessed the most tragic and horrific event he has experienced in his career, when the group lost 33 customers in the gun attack on a beach in Tunisia.

"The horror is something that will live with us forever," he said, adding praise for the people in the organisation and the way they handled it.

He said the Tunisia attack had cost TUI a total of €52m, which has been absorbed by the group.

Long said in order to offset the impact of Tunisia, along with the cessation of flights to Sharm el Sheikh, TUI is switching capacity to other winter sun destinations, mainly the Canary islands and Cape Verde.

He said the strength of the group’s long-haul programme, particularly to Mexico and the Caribbean, is also helping to lessen the impact of the events in Tunisia and Egypt.

Long said the Caribbean was perceived as a safe destination and TUI’s decision to expand in the region was well-timed.

"It gives us a real strength because it gives our customers choice in terms of different destinations when we are curtailing larger programmes like Egypt," he said.

"It would be very difficult for anyone else to wake up and decide to grow their long-haul programmes now."

TUI said in the UK, winter bookings are up 4% and average selling prices are up 2%, with lower jet fuel costs and the impact of the weaker Euro on accommodation costs partly offsetting the increase in long-haul.

"To date, 51% of the winter programme has been sold. The key driver of cumulative volume expansion is long-haul, for which overall bookings are currently up 16%,’ it said.

The group said three additional 787 Dreamliner aircraft had helped grow long-haul capacity in Mexico, Dominican Republic and Jamaica, plus the addition of Costa Rica to the programme.

"Medium-haul trading volumes have also been strong since our last trading update, with growth driven by the Canaries, Cape Verde and Cyprus,"