TUI Travel
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TUI Travel – Key figures
| € million | Q2 2008 | Q2 2007 | Var. % | H1 2008 | H1 2007 | Var. % |
|---|---|---|---|---|---|---|
| Turnover | 4,575.2 | 3,553.6 | + 28.7 | 8,046.6 | 6,058.9 | + 32.8 |
| EBITA by division | - 159 | - 3 | n/a | - 483 | - 257 | - 87.9 |
| Gains on disposals | – | – | – | – | ||
| Restructuring | + 190 | + 3 | + 217 | + 5 | ||
| Purchase price allocation | + 12 | – | + 54 | – | ||
| Other one-off items | + 28 | + 31 | + 43 | + 39 | ||
| Underlying EBITA by division | 71 | 31 | + 129.0 | - 169 | - 213 | + 20.7 |
| Investments | 85.9 | 38.0 | + 126.1 | 150.4 | 69.4 | + 116.7 |
| Headcount (30 June) | – | – | – | 51,230 | 36,251 | + 41.3 |
Turnover and earnings
In the second quarter, turnover by TUI Travel climbed 28.7% year-on-year due to the first-time consolidation of the First Choice activities. Adjusted for this effect, the former TUI entities reported a decline in turnover of 4.5%. Accumulated turnover by TUI Travel for the first half of the year were 32.8% up year-on-year, with underlying turnover down 1.9% year-on-year. Due to the consolidation of First Choice and the charges resulting from the strategic realignment of TUI Travel’s airline activities, earnings declined by € 156 million in the second quarter year-on-year.
However, in the second quarter of 2008, underlying EBITA by TUI Travel grew by € 40 million to € 71 million. Accumulated for the first half of the year earnings declined by 87.9% year-on-year. Adjusted for one-off effects earnings rose by 20.7% year-on-year.
Mainstream
Mainstream Holidays, the largest sector within TUI Travel, covers retail, tour operations, airline, accommodation as well as other tourism services in the three source markets Central Europe, Northern Europe and Western Europe.
In the first quarter of 2008, the Canadian tour operator activities and the French tour operator Marmara were reclassified to the Mainstream sector. Activities in Canada have since been managed as part of the Northern Europe sector, while Marmara has been allocated to Western Europe.
Mainstream volumes
| ‘000 | Q2 2008 | Q2 2007 | Var. % | H1 2008 | H1 2007 | Var. % |
|---|---|---|---|---|---|---|
| Central Europe | 2,918 | 3,203 | - 8.9 | 4,862 | 5,110 | - 4.9 |
| Northern Europe | 2,475 | 1,916 | + 29.2 | 4,151 | 3,198 | + 29.8 |
| of which First Choice Holidays | (833) | 0 | – | (1,304) | 0 | – |
| Western Europe | 1,542 | 1,227 | + 25.7 | 2,534 | 2,040 | + 24.2 |
| of which First Choice Holidays | (304) | 0 | – | (426) | 0 | – |
| Total | 6,935 | 6,346 | + 9.3 | 11,547 | 10,348 | + 11.6 |
Central Europe
In source market Central Europe (Germany, Austria, Switzerland and the airline TUIfly.com), customer volumes dropped by 8.9% in the second quarter of 2008 and by 4.9% in the first half of 2008. This decline was largely attributable to the downsizing of the seat-only business following the reduction in the size of TUIfly’s fleet by eight aircraft effected in the second quarter of 2008. German tour operators continued to record persistently sound demand for high-value brochure products, driving an improvement in average margins and an increase in the load factor on reduced capacities. TUIfly’s seat-only business recorded a higher load factor due to reduced capacities in the second quarter but faced an increase in aircraft fuel costs which could not be fully passed on to customers in the current competitive environment. TUI Suisse benefited from the highly attractive pricing of its travel portfolio in a persistently positive market environment. In Austria, TUI Austria offset lower customer volume by higher margins in a stable overall market.
Northern Europe
In source market Northern Europe (UK, Ireland, Nordic countries and the airlines First Choice Airways, Thomsonfly and TUIfly Nordic), volumes grew by 29.2% year-on-year in the second quarter of 2008 and 29.8% in the first half of the year due to changes in consolidation. Adjusted for the first-time consolidation of First Choice, customer volumes dropped by 14.2% in the second quarter and 10.9% in the first half of 2008. This decline was primarily due to the substantial reduction in the city pairs portfolio in Thomsonfly’s seat-only business. Since 1 May 2008, the British airlines Thomsonfly and First Choice Airways have operated under a common airline operating certificate. As a result, overlaps within the flight schedules have been avoided and a stable schedule has been offered despite a reduction in capacity. With the deletion of unprofitable city pairs the flight portfolio is now more strongly oriented towards actual requirements in the travel market. The quality of margins improved substantially year-on-year since products offered at reduced prices accounted for a lower proportion of turnover and the load factor rose as a result.
TUI Nordic benefited in particular from its successful exclusive hotel programme in a persistently positive market environment. Operations in Canada continued to be adversely affected by the highly competitive market scenario. On the one hand, in the winter months activities in Canada play an important strategic role, characterised by strong activity in the travel market in that region, partly due to the counter cyclical deployment of aircraft from other source markets. On the other hand, the summer business traditionally only plays a minor role in the Canadian travel market.
The integration of activities in the UK was continued according to plan. The expected synergy potential was correspondingly achieved.
Western Europe
The source market Western Europe (France, the Netherlands, Belgium and the airlines Corsairfly, Arkefly and Jetairfly) recorded due to consolidation an increase in volumes of 25.7% in the second quarter and 24.2% in the first half of the year. Adjusted for the first-time inclusion of the customer volume of the French tour operator Marmara, a slight increase of 0.9% was recorded for the second quarter of 2008 and of 3.3% for the first half of the year. The French travel market showed a stable development in the second quarter. TUI tour operators in France showed a positive development in the second quarter due to the streamlining of their product portfolio. In addition, declines in volumes for individual destinations such as Morocco and Kenya were offset by an increase in demand in Corsair’s seat-only business as well as cost reductions. Tour operators in Belgium and the Netherlands reported sound demand in the travel market in the second quarter.
Specialist Holidays
The Specialist Holidays sector, comprising various specialty tour operators for the Specialist, Premium and Lifestages segments, posted a slight year-on-year increase in volumes to 370 thousand customers in the second quarter of 2008 and 544 thousand customers in the first half of the year. Specialist segment in Continental Europe reported a positive development of business. The Premium segment in the UK continued to show a positive development in the second quarter, with long-haul tours, in particular, posting growth. In the Lifestages segment, the weakening of the economic situation in the US adversely affected demand for package tours for students.
Activity
In the Activity sector, which comprises travel companies for active holidays in the Marine, Adventure and Experiential segments, business continued to show a positive development in the second quarter. Apart from the favourable operative development, the sound performance was also driven by positive profit contributions from the acquisitions made in 2007 in the Adventure and Experiential segments.
Online Destination Services
The Online Destination Services sector pools Online Services and classical incoming agency services. Online Services continued the sound performance recorded in the 2007 reference quarter. Earnings by incoming agencies decreased slightly year-on-year due to the decline in volumes for the Morocco destination and in the excursion business in Spain.