2nd Oct 2014 06:20
LONDON (Alliance News) - UK travel operator TUI Travel PLC Thursday confirmed it will record an underlying full year operating profit at the top end of its growth guidance, boosted by strong trading in the UK and growing demand for its "unique" all-inclusive package holidays.
The travel operator, which owns Thomson and First Choice, said it is confident of achieving underlying operating profit growth of at least 9% on a constant currency basis for the financial year ended September 30. It had previously guided for profit growth of between 7% to 10%.
TUI Travel's underlying profit excludes separately disclosed items, acquisition related expenses, impairment of goodwill and interest and taxes.
"Our flexible and resilient business model is enabling us to deliver sustainable, profitable growth against a backdrop of more competitive trading in the commodity space and an increase in airline capacity," said Chief Executive Peter Long in a statement.
TUI Travel said trading during the Summer 2014 peak season was strong, driven by the UK and Germany.
"Our strong trading and market performance continues to be driven by increased customer demand for unique holidays and higher conversion rates from our web platforms, driven by our digital transformation strategy," said Long.
TUI Travel said its has sold roughly 38% of its overall mainstream programme for Winter 2014/15, with overall bookings up by 2%.
It said it has also seen an "encouraging start" to Summer 2015 trading, with UK bookings up by 11%, boosted by higher average selling prices.
TUI Travel said it has now reduced capacity in the Nordics to "strengthen its competitive position", as it faced challenging trading conditions in the region.
"A reduction in bookings of 5% reflects capacity cuts and we are encouraged by a 2% increase in average selling prices over the same period last year," it said.
Last month, TUI Travel and its German parent TUI AG reached a deal on their previously proposed merger, which will see TUI Travel shareholders own a 46% stake in a combined group that will have a fully-diluted equity value of around GBP5.2 billion.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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