TUI Travel to cut summer ’09 capacity by 15%

TUI Travel is to cut summer 2009 capacity in the UK by 15% and by 21% this winter.

The operator is to take 11 aircraft out of the flying programme for next summer and reduce winter flying by six aircraft.

This includes a Boeing 767 been removed from next summer’s long haul flying programme following a “slight switch” in demand for medium haul destinations.

The moves are being made despite the merged TUI/First Choice company describing early sales for next summer as “starting positively” with selling prices up by 12%.

Chief executive Peter Long said: “While the evidence to date suggests that consumers view holiday spending as a high priority, we continue to prepare the business to deal with any consequences of the current economic climate.

“Accordingly, we are taking out capacity for the coming seasons where it makes sense to do so and retain significant flexibility to adjust supply further if demand trends change.”

He added that the company was seeing no evidence to suggest that demand is slowing for any seasons on sale. This reflected a similar message from Thomas Cook yesterday (see separate story).

Trading for all seasons, particularly in the UK, continues to be buoyant despite the “challenging” economic conditions, a TUI Travel statement said.

“Our trading metrics are showing no evidence that consumers are trading down or curtailing their holiday plans.” 

Current trading for this summer shows sales in the UK up by five per cent with Egypt, Turkey and Greece all seeing growth “significantly higher” than last year. Reduced levels of discounts in the lates market due to capacity down by 13% has seen average selling prices rise by 15%, and 20% in the last six weeks.

The average selling price for winter 2008-09 is up by 13%, with sales up by two per cent based on capacity reduced by 21%.

The UK summer 2009 programme is seven per cent sold, in line with the previous year, with average selling prices of charter-based holidays up by 12%.

TUI Travel recorded an underlying operating profit of £65.4 million in the three months ending June 30, up from £47 million in the same period last year.

The operating loss for the nine months to the end of June was reduced from £274.3 million to £185.1 million.

The ongoing integration process will see the consolidation of mainstream UK call centres and customer service operations by October.

The group has made synergy savings of £11 million so far in the current financial year and is on course to hit a full year target of £25 million. The company says it is on target to achieve savings of £150 million by 2010.

by Phil Davies