Holiday group TUI soaks up profits uplift despite costs of swine flu

TUI Travel, owner of the British holiday companies Thomson and First Choice, shrugged off the recession and the impact of swine flu yesterday as it posted a surge in underlying third-quarter profits.

The package tour operator said its customers were still putting off booking winter holidays, with UK sales down by 21 per cent on last year, However, winter trade has picked up over the past four weeks and is down just 4 per cent year-on-year, with non-eurozone countries such as Turkey and Egypt still the favourite winter sun destinations.

TUI said the outbreak of swine flu in Mexico had knocked about £7m off its UK profits during the three months because it had to pay to repatriate customers, offer refunds or switch them to other destinations. While bookings to Mexico have risen by 27 per cent since TUI resumed flights there at the end of May, the number of Mexican holidays sold is down by 10 percentage points since last year. Bookings for UK charter holidays have picked up this quarter, reflecting the fact that Britons still regard their core summer holiday as sacrosanct. The most popular destinations include Turkey, Egypt, Cyprus, Greece, the Balearic Islands and mainland Spain.

TUI said its UK sales volumes were up 2 per cent since its last update on 19 May, although cumulative bookings for this summer had fallen by 12 per cent since its launched its brochures last year. While the group's UK holiday capacity was down by 16 per cent, it managed to increase the average price of its packages by 7 per cent.

For the three months to the 30 June, TUI's underlying profits were up by a better than expected 57 per cent at £102m, driven by £21m of incremental cost savings and robust trading in the UK, Germany and Nordic countries. Total sales fell by 1 per cent to £3.58bn over the period and underlying operating margins rose by 2.9 per cent.

Over the first nine months of the financial year, TUI reduced its pre-tax losses by 40 per cent to £411m, as sales rose by 2 per cent to £9bn.

Peter Long, the chief executive, said TUI was "well positioned" to meet its expectations for the year but warned: "We anticipate market conditions will remain challenging and expect the later booking pattern to continue in the next financial year. We will continue to maintain a high degree of flexibility in our business model to allow us to alter capacity in line with market conditions."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Austen Lloyd: Law Costs HOD - Southampton

£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...

SThree: Recruitment Resourcer

£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn