TUI Travel Loss Narrows on Cost Reductions, Online Bookings
The underlying operating loss narrowed by 6.9 percent to 108 million pounds ($176 million) in the fiscal first quarter, Crawley, England-based TUI Travel said in a statement today. Sales rose 0.5 percent to 2.73 billion pounds, while online bookings in the mainstream unit gained 8 percent for the coming summer season.
“Our digital transformation continues to gather pace, with a very successful online performance,” while savings increased in France, Chief Executive Officer Peter Long said in the statement. Business in Egypt is “seeing a recovery, while it is still fairly slow,” he said on a conference call.
TUI is focusing on cutting costs and selling vacation packages directly to customers as Europe emerges from the longest recession since introducing a common currency. Unrest in countries including Egypt and Thailand meant the company had 239,000 fewer customers in the quarter, a decline of about 6 percent.
The company reduced its offering in Egypt to amount to 5 percent of its current winter program, from 9 percent last year. Unrest in Thailand’s capital Bangkok only partly affects TUI Travel, because it flies directly into the seaside town of Phuket several hundred miles south, Long said.
Customer numbers at the mainstream business, which excludes so-called specialist trips such as adventure travel and sports excursions, declined in all regions in the winter season, falling 36 percent in France and 10 percent in Germany, the company’s biggest market by customers. Higher selling prices in the U.K. meant revenue there was up 1 percent while customer numbers dropped 2 percent.
The shares fell 1.3 percent to 419 pence at 8:57 a.m. in London. HSBC analysts reiterated a neutral recommendation on TUI Travel stock today, saying cruise-ship operator Carnival Plc (CCL) and voucher provider Edenred may offer more gains for investors in the European leisure sector.
TUI Travel has gained about 38 percent in 12 months, while shares of Thomas Cook Group Plc (TCG), its largest competitor, almost tripled. Carnival has declined about 4.5 percent.
TUI Travel reiterated a forecast to raise underlying operating profit by 7 percent to 10 percent this year excluding currency shifts. Bookings for the coming summer season in the mainstream business are currently up 1 percent, while average selling prices are up 3 percent, the company said.
The net loss narrowed to 111 million pounds, from 121 million pounds a year earlier.
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