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UPDATED: First Choice ‘confident’ despite widening winter losses
First Choice saw its traditional winter pre-tax losses rise to £82.5 million against £76.5 million a year earlier.
But the group, which is finalising a merger with TUI to create Europe’s largest operator, said summer revenues across all sectors were up, with long haul showing a 26% rise in revenues and a 21% increase in bookings.
With summer short haul sales down by 8% and customers down by 6%, overall summer mainstream holidays revenues are up by 3% with passenger numbers flat. Online bednights bookings are up 32%, activity holidays revenues are up 5% and specialist holidays up 18%.
Short haul capacity has been cut, while medium-haul levels have been maintained where there is strong demand for Turkey and Greece.
“We anticipate that margins will remain under pressure as the impact of the rise in APD (Air Passenger Duty) and year-on-year increase in fuel costs affect our ability to recover the additional cost incurred,” the company said, describing the UK market as “continuing to be particularly challenging”.
The greater winter losses were attributed to higher financing cost resulting from increased spend on acquisitions. The group spent almost £146 million on seven niche purchases during the six month period to the end of April.
First Choice said it had acquired the Danish Hannibal Travel Group, a premium escorted tours operator, after the end of the winter six month period.
The company revealed that it has gained greater control of distribution, with 62% of winter stock sold through in-house channels, up from 57%, and 71% of summer 2007 holidays, up from 66%.
Chief executive Peter Long said: “I am pleased with the first half trading performance in what has been a challenging market, particularly in the UK and of course an exceptionally busy period for the company. The recent acquisitions are performing very well and the pipeline remains strong.
“It gives me great confidence for the future that we have such strength in depth within our management team that we have been able to pursue a large corporate transaction with TUI, complete the competition process and whilst still delivering a good trading performance and integrating a number of acquisitions.
“Over the next few months this capability will be vital as we focus on delivering the results through the key summer period and completing the merger.”
The merger with TUI is due to be completed by October 1, subject to a number of conditions.
by Phil Davies
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