Tui’s Q3 results show online summer bookings up 4%

Tui Travel claims to be outperforming the market with a strong third quarter operating performance.

The Thomson and First Choice parent’s third quarter results out this morning show underlying operating profits up 47% to £112 million despite revenue down 2% to £3.7 billion.

Underlying operating profits from the group’s UK and German business are up by 17% and 16% respectively in the period to June 30.

Higher than average selling prices were reported across the group’s mainstream sector for this summer, with 88% of the programme sold.

“Unique’ holidays now account for 71% of mainstream bookings – a rise of 3% over last year.

Mainstream online bookings, which account for 36% of all summer bookings, are up by three percentage points. Online summer bookings are up 4% to 51% in the UK.

However, overall UK bookings are down by 1% as the group reported “an increased level of capacity in the wider market” this year.

A total of 87% of summer capacity from the UK has been sold with average selling prices up by 2%, reflecting the change in mix towards more unique holidays.

Chief executive Peter Long said: “We are pleased to have delivered another strong performance this quarter across the group with a 21% increase in underlying operating profit2.

“Demand for our unique holidays, which now account for over 70% of summer sales, has continued to grow, as have bookings made online.

“Our One Mainstream structure, led by Johan Lundgren, continues to yield tangible benefits across a number of areas as we drive the organisation to deliver a performance similar to that achieved by our UK business.

“We remain pleased with progress in summer trading, despite strong comparatives, and are achieving higher average selling prices across mainstream overall.

“As the trading environment in the commodity space has become more competitive and airline capacity continues to increase, our flexible and resilient business model – focused on unique holidays and our relationship with the customer throughout their whole holiday experience – enables us to deliver sustainable, profitable growth and out-perform the market.”

Winter 2014-15 sales from the UK are up by 3% with selling prices up by a similar level and 23% of trhe programe has been sold.

“We are increasing capacity in selected destinations such as Jamaica and Mexico where we see growing demand, enabled by the expansion of our 787 fleet,” the company said.

“Sales of unique holidays account for 83% of bookings, up three percentage points on prior year. We are also pleased with a strong start to UK trading for Summer 2015.”

A merger between Tui Travel and German counterpart Tui AG was proposed in June with the UK Takeover Panel granting the companies an extended deadline of September 19 to finalise the deal.

The group said further announcements will be made as required.

Leisure analyst firm Langton Capital, responding to the results, said: “Whilst the cumulative three quarters to end-June will always be loss-making and therefore give a limited view as to the outcome for the year as a whole, Tui Travel has put a significantly more positive spin on trading than did Thomas Cook only a week ago.

“The group clearly believes that its more differentiated product will protect its business and it says that average prices are up. Thomas Cook said that they are down.

“The group’s shares, in common with many across the UK’s leisure sector, have fallen by more than 20% since their March highs and the group’s rating is now not demanding.

“However, concerns with regard to a potential for stock-dumping towards the end of this season combined with a lingering disappointment that there is to be no control premium paid by Tui AG in order to effect a full takeover, continue to overhang the shares.

“Whilst the company is likely to lose its independence before the end of this year, until we see greater clarity with regard to the current season, we would be inclined to avoid the shares.”

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