TUI Travel – Key figures
€ million | Q3 2009/10 | Q3 2008/09 restated | Var. % | 9M 2009/10 | 9M 2008/09 restated | Var. % |
| Turnover | 3,857.4 | 4,007.9 | - 3.8 | 9,376.6 | 10,247.3 | - 8.5 |
| Divisional EBITA | - 99.1 | 55.2 | n/a | - 531.5 | - 378.1 | - 40.6 |
| Gains on disposal | - 9.4 | - 0.6 | - 11.4 | - 0.6 | ||
| Restructuring | + 9.0 | + 6.2 | + 22.2 | + 5.6 | ||
| Purchase price allocation | + 17.8 | + 11.1 | + 49.7 | + 33.0 | ||
| Other one-off items | + 175.0 | + 26.1 | + 191.7 | + 82.6 | ||
| Underlying divisional EBITA | 93.3 | 98.0 | - 4.8 | - 279.3 | - 257.5 | - 8.5 |
| Underlying divisional EBITDA | 147.6 | 167.4 | - 11.8 | - 119.8 | - 41.2 | - 190.8 |
| Capital expenditure | 63.2 | 62.4 | + 1.3 | 188.7 | 172.3 | + 9.5 |
| Headcount (30 June) | – | – | – | 51,718 | 50,391 | + 2.6 |
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Turnover and earnings
In the third quarter of 2009/10, turnover by TUI Travel decreased by 4% year-on-year. The decline was primarily driven by the closure of Europe’s airspace due to the volcanic ash cloud and the associated loss in turnover. Moreover, the pace of recovery varied in individual source markets following the financial crisis. A slightly positive effect arose from the 3% rise in the exchange rate of Sterling against the Euro versus the previous year.
At €93m, underlying earnings by TUI Travel were almost flat versus the prior year in the third quarter of 2009/10.
The development of earnings benefited in particular from the scheduled delivery of integration synergies in the UK. Moreover, the French tour operator activities grew year-on-year both in terms of customer volumes and average margins and thus contributed to a positive development.
Additional positive effects arose from the restructuring of business in Canada in the wake of the completion of a strategic venture between operations in Canada and tour operator Sunwing in January 2010.
On the other hand, the performance was considerably impacted by the development of the tour operator business in the UK and Germany. Both source markets recorded declining margins in highly competitive environments, with corresponding decreases in earnings year-on-year. The fall in margins in the UK was above all driven by the closure of airspace due to the volcanic eruption and the budget cuts implemented by the government. In Germany, the situation was also affected by price pressure on consumer goods and the economic environment, causing a shift in demand to lower value tours, which was higher than expected.
In the third quarter of 2009/10, TUI Travel had to carry adjustments worth a total of €192m for the following one-off effects:
- gains on disposal of €9m, mainly arising in connection with the restructuring of the Canadian business,
- restructuring costs of €9m, in particular for restructuring the tour operator activities in France and Poland and integrating incoming service providers in Spain,
- effects of purchase price allocations worth €18m, and
- one-off effects of €175m. These one off-effects included one-off expenses for the closure of European airspace due to the volcanic ash cloud of €123m, adjustments of receivables held from the integration of IT systems of €29m and further integration costs of around €23m.
In the third quarter of 2009/10, reported earnings by TUI Travel decreased by €154m year-on-year to €-99m. Cumulative unadjusted earnings for the first nine months of the year 2009/10 fell by €153m year-on-year to €-532m. Cumulative underlying earnings amounted to €-279m, down €22m year-on-year.
Mainstream
Mainstream, the largest sector within TUI Travel, comprises sales of flight, accommodation and other tourism services in the three source markets Central Europe, Northern Region and Western Europe.
TUI Travel – Mainstream volumes
| '000 | Q3 2009/10 | Q3 2008/09 | Var. % | 9M 2009/10 | 9M 2008/09 | Var. % |
| Central Europe1) | 1,965 | 2,650 | - 25.8 | 4,658 | 6,200 | - 24.9 |
| Northern Region2) | 1,905 | 1,885 | + 1.1 | 3,931 | 4,289 | - 8.3 |
| Western Europe | 1,419 | 1,407 | + 0.9 | 3,104 | 3,152 | - 1.5 |
| Total | 5,289 | 5,942 | - 11.0 | 11,693 | 13,641 | - 14.3 |
1) Numbers include city-pairs business up until takeover by Air Berlin.
2) The figures were restated retroactively since Canadian customers are no longer included in the statistics due to the formation of the Sunwing joint venture in Canada.
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Central Europe
In the Central Europe sector (Germany, Austria, Switzerland, Poland and airline TUIfly), customer volumes declined by 26% year-on-year in the third quarter of 2009/10. This was mainly attributable to TUIfly’s exit from the city-pairs business, which was taken over by Air Berlin in accordance with the agreement made. Adjusted for the effect of exiting the city-pairs business, customer volumes decreased by 7%. The German market was impacted by declines in volumes and lower margins year-on-year. Markets in Switzerland and Austria also recorded falling customer volumes in a highly competitive environment. TUI Poland, by contrast, showed a gratifying development and generated substantial increases in customer volumes.
Northern Region
In the Northern Region sector (UK, Ireland, Canada, Nordics and airlines Thomson Airways and TUIfly Nordic), customer volumes rose slightly by 1% year-on-year in the third quarter of 2009/10. While volumes rose considerably in the Nordics, the UK recorded a relatively weak development of customer volumes. The British market in particular was also affected by lower average margins.
Integration of activities in the UK remained on track in the third quarter of 2009/10 so that the expected synergies were delivered. Business in Canada benefited from the strategic venture with tour operator Sunwing. The joint venture, in which TUI Travel holds a 49% interest, was established in January 2010 in order to enhance the market position.
Western Europe
The Western Europe sector (France, the Netherlands, Belgium and airlines Corsairfly, Arkefly and Jetairfly) recorded a slight year-on-year increase in volumes of 1% in the third quarter of 2009/10. Tour operators in France reported growth, driven above all by an increase in demand for tours to destinations suffering from civil unrest in the previous year. Activities in Belgium were flat versus the previous year, while the Netherlands reported a decline in volumes. The French airline Corsairfly benefited from a stabilisation of margins in a highly competitive environment.
Specialist & Emerging Markets
The Specialist & Emerging Markets sector consists of specialist tour operators in Europe, North America and emerging markets such as Russia. In the third quarter of 2009/10, customer volumes fell by 8% year-on-year to 269 thousand. While specialists in Continental Europe benefited from slight growth, specialists in the UK recorded a decline in volumes. Business in North America decreased year-on-year in the quarter under review, primarily due to continued weak demand for student travel. The development of business in the emerging markets was impacted by the cost of acquisition for newly acquired interests.
Activity
The Activity sector, which comprises Marine, Adventure, Ski, Student and Sport, reported a year-on-year decline in the third quarter of 2009/10. The adverse effect was above all attributable to lower volumes in the Ski and Sport divisions, while the Student division benefited from new acquisitions. Adventure, by contrast, was impacted by lower capacity and tougher competition, in particular in the polar expedition segment.
Accommodation and Destinations (A&D)
The A&D sector comprises online services and incoming agencies. Online services again recorded volume growth, in particular in large European cities, following an expansion of their portfolio and promotional activity. The incoming agency business was almost flat versus the prior year.