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TUI UK hit by 30m euros restructuring costs
TUI UK took a 30 million-euro hit last year due to restructuring costs.
Figures released by the German travel giant today show that profits at the Northern Europe division, which includes Thomson parent TUI UK, were down by 14 million euros or 17.5% to 65 million euros.
TUI said this decline had been “deliberately accepted with a view to charting the future in the British market”.
TUI AG overall tourism earnings rose by 75% to 362.4 million euros last year over 2003 following two “difficult years”.
The group said: “The restructuring measures in the UK reduced earnings by more than 30 million euros.”
CEO Michael Frenzel predicted double digit growth for the group in 2005.
He explained that the decline in the UK had been accepted “as the price to pay for making ourselves fit for the future from a position of strength on the British market”.
He added: “As a result of the restructuring measures we are expecting significant yearly improvements from 2006 onwards. From the implementation we expect to incur costs in 2005 which will be mostly covered by the positive restructuring effects.”
TUI UK saw customer numbers grow by 3.2% to 4.66 million in 2004, with Thomson Holidas accounting for 3.93 milion of the total.
“Customers continued to be price-conscious and to show a trend towards late booking. Nevertheless, average prices improved. This was mainly due to the balance between available capacity and demand,” the group´s annual report said.
Competition “remained intense” due to low-cost airlines and new distribution channels.
But TUI UK´s move towards more inhouse distribution and the expansion of the Thomson website was benefiting the business.
Report by Phil Davies
Phil Davies
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