TUI Travel – Key figures
| € million | Q1 2009 | Q1 2008 | Var. % |
|---|---|---|---|
| Turnover | 2,914.4 | 3,465.7 | - 15.9 |
| Divisional EBITA | - 363.8 | - 325.1 | - 11.9 |
| Gains on disposal | – | – | |
| Restructuring | + 27.5 | + 27.1 | |
| Purchase price allocation | + 10.5 | + 42.6 | |
| Other one-off items | + 37.1 | + 15.7 | |
| Underlying divisional EBITA | - 288.7 | - 239.7 | - 20.4 |
| Capital expenditure | 54.7 | 64.5 | - 15.2 |
| Headcount (31 March) | 48,667 | 47,919 | + 1.6 |
Turnover and earnings
In the first quarter of 2009, turnover by TUI Travel decreased 16% year-on-year. The decline in turnover was primarily attributable to the capacity cuts in the volume business and the year-on-year weakening of the exchange rate of the British pound against the euro. Another reason for the decrease in turnover by TUI Travel was that Easter in 2009 fell into the second quarter.
TUI Travel’s operating earnings were seasonally negative in the first quarter. They declined by €49m to €-289m year-on-year. Apart from the Easter business not falling into the first quarter, this decline was driven by external factors impacting the travel business for several long-haul destinations and affecting in particular source markets France and the Nordic countries. The French West Indies and Madagascar, characterised by political unrest in the first quarter of 2009, constitute important winter destinations for the French travel market. For the long-haul business of the Nordic tour operators, Thailand, which was also affected by civil unrest, constitutes another key destination.
All volume markets showed a cyclical downturn in demand for holiday tours in the first quarter, as expected. Thanks to active capacity management, however, both pricing and utilisation of the committed capacity were maintained at a high level, despite a decline in booking numbers.
In the first quarter of 2009, TUI Travel had to carry adjustments totalling €75m for special one-off effects. Earnings for the first quarter included in particular the following adjustment items:
- restructuring costs of €28m, arising in particular on discontinuing operation of four leased hotel complexes in Turkey and Greece and restructuring tour operator activities in France;
- effects of €11m from purchase price allocations, and
- one-off effects of €37m, in particular integration costs incurred for the tour operator and incoming activities in the UK and Spain.
Accordingly, reported earnings by TUI Travel decreased by 12% to €-364m.
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 Europe and Western Europe.
TUI Travel – Mainstream volumes
| ‘000 | Q1 2009 | Q1 2008 | Var. % |
|---|---|---|---|
| Central Europe | 1,533 | 1,955 | - 21.6 |
| Northern Europe | 1,187 | 1,395 | - 14.9 |
| Western Europe | 765 | 1,002 | - 23.7 |
| Total | 3,485 | 4,352 | - 19.9 |
Central Europe
In the Central Europe sector (Germany, Austria, Switzerland, Poland and airline TUIfly) customer volumes decreased by 22% year-on-year in the first quarter due to the late Easter in 2009 and the capacity reductions in the TUIfly airline. Since quarterly earnings did not include the Easter business, TUI Deutschland in particular generated a lower profit contribution in the first quarter in spite of stronger pricing year-on-year since price-reduced offerings accounted for a lower proportion of the volume sold. TUI Suisse recorded a decline in margins due to the intensification of competition in the Swiss travel market in the first quarter. In Austria, TUI Austria benefited from synergies arising from the merger of TUI and First Choice activities and cuts in hotel commitments on lower customer volumes. TUI Poland, which had achieved considerable growth in the previous year, reported a decline in demand in the first quarter of 2009, in particular due to the weaker exchange rate of the Polish zloty against the euro.
Northern Europe
In the Northern Europe sector (UK, Ireland, Canada, Nordic countries and airlines First Choice Airways, Thomsonfly and TUIfly Nordic) customer volumes declined by 15% year-on-year in the first quarter of 2009, roughly matching capacity cuts. The UK recorded strong business in the lates market towards the end of the first quarter, creating margin improvements and a year-on-year increase in load factors. In contrast, the Nordic TUI tour operators saw their business impacted by the slowdown in the economic climate in Sweden and Denmark and unrest in Thailand, a popular winter destination. Canada continued to be characterised by overcapacity in the travel market and again did not achieve a satisfactory performance. The TUI tour operators in this market did not manage to pass the rise in their cost base, in particular fuel costs, on to their customers in the winter season, which constitutes the key season for the Canadian market.
The integration of activities in the UK market continued to progress according to plan and synergies were therefore delivered as expected.
Western Europe
The Western Europe sector (France, the Netherlands, Belgium and airlines Corsairfly, Arkefly and Jetairfly) recorded a decrease of 24% in customer volumes in the first quarter of 2009. Demand in France was affected by the aftermath of civil unrest in Guadeloupe, Martinique and Madagascar, which constitute key winter destinations for the French market. This impacted travel activities in these destinations over a period of several weeks and produced extra costs incurred to bring departed customers back. In the Netherlands, TUI Nederland’s performance improved versus prior period, which was characterised by an increase in maintenance costs. TUI Belgium continued to post a gratifying development and achieved year-on-year growth thanks to strong demand in the first two months of 2009, in spite of the change in timing of Easter.
Specialist & Emerging Markets
The Specialist & Emerging Markets sector, which consists of specialist tour operators in Europe, North America and growth markets such as Russia, reported 173 thousand customers in the first quarter of 2009, down 16% year-on-year. The specialist tour operators in Continental Europe recorded a positive development of business. The premium segment in the UK continued to post a positive performance in the first quarter, recording in particular growth in long-haul tours as a result of the integration of the former TUI and First Choice operations. In contrast, TUI Travel business in North America continued to be adversely affected by the slowdown in the US economy in the first quarter.
Activity
The Activity sector, which comprises travel companies offering active holidays in the Marine, Adventure as well as Ski, Student & Sport segments, recorded a slight decline in its business performance in the first quarter. The yacht charter business in North America in particular reported a decrease in demand. The skiing business also saw a weakening of demand and responded by cutting its portfolio, a move that resulted in higher average travel prices in the winter season.
Online Destination Services ODS
The Online Destination Services sector comprises online services and classical incoming services. Online Services reproduced the sound performance achieved in the first quarter of 2008. Due to lower customer numbers and a decline in the excursion business in Spain, earnings by incoming agencies fell slightly year-on-year.