TUI UK shedding 2,000 jobs

Restructuring costs within Thomson parent TUI UK cost £31.3 million last year, mainly due to redundancies.

German parent company TUI AG had described the figure as being more than Euros 30 million, as reported.

But TUI Northern Europe chief financial officer Will Waggott later clarified the costs as coming out as £31.3 million for the division which includes the UK and Scandinavia, leaving a 2004 pre-tax profit of £44 million – a £10 million fall over 2003. He declined to break down the profit figure for TUI UK, although passenger numbers were up by 3.5% year-on-year to 4.66 million of which 3.93 million came through Thomson Holidays.

TUI UK is cutting 2,000 staff to leave an estimated 11,500 employees by the end of 2005, against original publicly stated head count reduction estimates of 800.  The total includes more than 900 going from the company’s central London head office, which is closing with functions moving to Luton by the third quarter of the year.

About 500 travel agency shop jobs are likely to be cut in addition to 500 overseas posts and 150 from call centres due to the development of new technology.

TUI Northern Europe chief executive Peter Rothwell denied that the company was exiting from high street travel retailing but admitted the number of shops was likely to reduce to a core of 500 in three to five years, down from more than 800. There were 40 shop closures in 2004 and would be a “maximum number” of 100 this year.

Mr Waggott added that it was difficult to operate shops economically within the London area enclosed by the M25, saying there was an “awful lot of realignment” in the retail estate. The company continues to recruit 1,500 agency staff every year due to staff turnover levels which are as high as 40% in the South East.

Meanwhile, web bookings are rising to account for about a quarter of all TUI UK business, compared to 15% in 2003.

Mr Rothwell said: “Our internet distribution is now bigger than that through Thomas Cook, First Choice and MyTravel combined.”  

Mr Waggott revealed that TUI UK was to merge its flight-only and low cost airline websites into a single portal by September. This will combine charter flight-only from 26 UK airports with Thomsonfly’s expanding flying programme from Coventry, Doncaster Robin Hood and Bournemouth airports under the Thomsonfly website.

TUI UK’s reliance on selling holidays to Spain is reducing, with the proportion due to drop to 50% in 2006 from 56% last year.

Current summer 2005 booking levels were described as “flat” but with improved margins being achieved. Specialist division summer sun numbers are expected to be down by 50,000 this year as the brands are experiencing “difficulty” but this will be more than compensated for by an anticipated doubling in cruise passengers to 100,000 due to Thomson Cruises’ fleet rising from two to four vessels.

In a separate development, TUI AG announced the creation of a joint venture in India with an unnamed partner in the country.

CEO Michael Frenzel said: “India, with its above-average economic growth and a proliferating middle class, not only has potential as a tourism destination, but even more so as a source market.

“TUI India will concentrate the tour operator activities of the World of TUI in this up-and-coming destination and create opportunities for participating in India’s strongly expansive outgoing business.”

Report by Phil Davies