TUI blames ash and Budget for bookings slump - Business News - Business - The Independent

TUI blames ash and Budget for bookings slump

Europe's largest holiday firm TUI Travel yesterday warned that its profits would be at the lower end of expectations as it blamed disruption from the volcanic ash cloud and uncertainty over the Government's emergency Budget for a "marked slowdown" in its UK market.

In addition to UK consumers booking their holidays later, the operator of Thomson Holidays said that more German customers had opted for less expensive, lower margin holidays, although bookings remained strong in the country.

TUI had previously guided towards profits of between £440m and £480m for the year to 30 September, but the shortfall in the UK and Germany means it will now be in the low "£440 millions". The update from TUI wiped nearly 10 per cent off its market value.

"The strong booking trends experienced up until the volcanic ash disruption in mid-April and the subsequent rebound in early May were not sustained throughout the early summer period," said Peter Long, chief executive of TUI Travel.

"This was particularly marked in the UK source market, where trading was affected by further airspace closures, good weather and post election uncertainty regarding the emergency budget."

As a result, TUI will now have to offload a higher expected proportion of holidays at a lower prices during the remainder of its financial year, which will hit margins.

For the nine months to 30 June, TUI's pre-tax losses widened to £540m, compared to £411m last year.

Its revenues tumbled by 7 per cent to £8.3bn over the period, although the fall was a less painful 4 per cent over the most recent three months.

TUI said it expected the recovery of Sterling against the euro would result in a foreign exchange hit of between £10m and £15m on its full year results. But on the upside, it expects cost savings to be £15m higher at £75m.

TUI painted a picture of UK consumers nervous about making bookings. The holiday operator said that while industry-wide UK booking volumes had tumbled by 10 per cent since its last update on 11 May, TUI's were down by just 2 per cent over the last 12 weeks.

"In the UK, the market has slowed markedly following the recurrence of airspace closures, the emergency budget and subsequent austerity measures and the better-than-average UK weather, combined with quiet trading during the World Cup," Mr Long said.

"Within this difficult market context we traded relatively well."

While TUI said that demand had improved in recent weeks, margins are lower than it previously forecast and load factor is now 83 per cent, which is one percentage point lower than last year. In terms of medium haul destinations, the most popular destinations for summer 2010 were the Balearics, Greece, Turkey, Canaries and mainland Spain. Further afield, consumers opted for Mexico's Cancun, Florida, the Dominican Republic's Punta Cana and Jamaica.

With the dust appearing to have settled on the Icelandic volcanic ash disruption in the spring, TUI said that almost 400,000 of its customers were affected by either having their holidays cancelled or being stranded abroad.

The company raised the total costs of welfare, repatriation and cancelled flights from the volcanic ash crisis by £10m to £105m.

Mr Long also warned on the outlook for the holiday industry, as consumers batten down the hatches.

He said: "It remains difficult to predict how the later booking pattern will change over the next 12 to 18 months, in the light of the current economic environment."

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
peopleThe report and photo dedicated to the actress’s decolletage has, unsurprisingly, provoked anger
Property
Home body: Badger stays safe indoors
property
PROMOTED VIDEO
News
The programme sees four specialists creating what they believe are three perfect couples, based on scientific matchmaking. The couples will not meet until they walk down the aisle together
tvUK wedding show jilted
Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
You've been framed: Henri Matisse's colourful cut-outs at Tate Modern
artWhat makes a smash-hit art show
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
Sport
Mikel Arteta pictured during Borussia Dortmund vs Arsenal
champions league
Voices
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Arts and Entertainment
Robin Thicke and Pharell Williams in the video of the song, which has been accused of justifying rape
music...and he had 'almost no part' in writing it
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

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Payroll & Accounts Assistant

£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week