MyTravel, the tour operator that almost went bust three years ago, more than quadrupled operating profits in the past year despite hurricanes and soaring fuel costs. The owner of Airtours and Going Places tapped into Britons' growing appetite for exotic destinations such as North Africa, Cuba and Brazil and said its turnaround strategy was on track.
Operating profits jumped to £55.2m in the year ended 31 October, from £12.9m the previous year. Its chief executive Peter McHugh said: "We have the right offer and are back as a strong competitor."
The vastly improved performance came despite a £47.3m increase in the company's fuel bill on the back of soaring oil prices, and the impact of the Asian tsunami, the American hurricanes and Egyptian terrorism. The company was forced to cancel flights and retrieve hundreds of customers from the affected regions. Mr McHugh said without that impact and the surge in fuel prices, the group would have been a year ahead of its turnaround targets. "Three [disasters] in one year at that size - that's pretty atypical," he said.
At the pre-tax level, MyTravel massively reduced its losses from £153.4m to £18.3m, including charges partly relating to store closures. It shut 110 Going Places shops last month but kept 90 per cent of the staff, about 450 people, and will be left with 500 stores at the end of the year. The closures will generate £10m annual cost savings from next year.
The closures came as MyTravel stepped up investment in its online sales operations, which now account for about 20 per cent of group sales, up from around 10 per cent a year ago.
The group achieved a record operating profit in northern Europe, while its North America business took a big hit from hurricane Wilma. Even so, the North American operation reported an operating profit while the UK remained in loss-making territory.
Winter bookings across the group are improving but remain behind last year. Mr McHugh reiterated the group's target of achieving an operating profit in all three divisions next year and a margin of 3.5 per cent in the UK in 2007.
Analysts at CSFB described the results as "very strong" and said they would revise up their forecasts slightly - high praise for a company that nearly went out of business and lost several of its top executives after a big black hole was discovered in its accounts in 2002-03. It staved off bankruptcy at the end of last year after a £800m debt-for-equity swap, which left shareholders with a tiny stake in the firm.
The shares closed up 12.25p, or 6.4 per cent, at 205.25p.Reuse content