TUI Travel net losses widen to €651m

TUI TRAVEL, Europe’s largest tourism company and the owner of Falcon, JWT and First Choice Holidays, saw its net losses widen to £516.2 million (€651 million) in the nine months to the end of June.

But the company echoed an earlier report from Thomas Cook by confirming there is no deterioration in consumer demand in its British and Irish businesses this summer. TUI recorded a 9 per cent rise in revenue growth in the April-June period compared to the year before.

On Wednesday, Thomas Cook said trading continued to be strong and that consumers were still going on holiday despite economic slowdown and unfavourable currency rates for British travellers.

But NCB Stockbrokers analyst Neil Glynn said he believed the rise in sales at TUI and Thomas Cook suggested that holiday-makers were choosing cheaper holidays, trading down from higher cost holidays to lower cost tour operators as economic conditions deteriorate.

Despite a sunny trading statement from TUI, the company still plans to cut UK winter capacity by up to 20 per cent year-on-year and 15 per cent year-on-year for summer 2009, which Goodbody Stockbrokers analyst John Goode said suggested the company was preparing for a slowdown.

In TUI’s UK and Ireland operations, average ticket prices are up 15 per cent over the summer period as lower capacity meant fewer discounts were required to sell last-minute package holidays.

Analysing the implications of the travel operator’s figures for the airline sector, Mr Goode said the reasonably strong performance of package holidays to date gave no guarantees that shorter trips will perform as well.