TUI Travel PLC Trading Update
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TUI Travel PLC is pleased to provide an update on current trading and outlook. This announcement also contains the financial information for TUI Travel PLC which has today been disclosed as part of the TUI AG 3rd quarter results.
Summer 2007
Since the trading update announced on 26 September the Summer 2007 season has traded out well and as a consequence, the TUI Travel PLC Board is satisfied that both the First Choice and TUI Tourism businesses will meet their expectations in respect of their 2007 financial year ends.
Current Trading 1
|
y-o-y variation% |
Summer 2007 Sales |
Summer 2007 Customers |
Summer 2007 Capacity |
|---|---|---|---|
| MAINSTREAM | |||
| Northern Europe | |||
| First Choice UK | |||
| Short-haul | -2 | flat | -5 |
| Medium-haul | +3 | +1 | flat |
| Long-haul | +27 | +24 | +25 |
| First Choice UK | +7 | +3 | flat |
| TUI UK | |||
| Short-haul | -5 | +2 | +3 |
| Medium-haul | -1 | -1 | -3 |
| Long-haul | -20 | -32 | -32 |
| TUI UK | -4 | -1 | -1 |
| UK Mainstream – Total | flat | flat | -1 |
| TUI – Nordic | +6 | +3 | +2 |
| Northern Europe – Total | +1 | +1 | flat |
| Central Europe | |||
| TUI – Germany | +6 | +10 | - |
| TUI – Austria | -2 | -4 | - |
| TUI – Switzerland | +22 | +18 | - |
| TUI Central Europe - Total | +6 | +9 | +10 |
| Western Europe | |||
| TUI – France | +2 | -2 | - |
| TUI – Belgium | +11 | +10 | - |
| TUI – Netherlands | +13 | +8 | - |
| TUI Western Europe | +8 | +6 | +7 |
| SPECIALIST 2 | +14 | +13 | |
| ACTIVITY 2 | +3 | n/a | |
| ODS | +33 | +21 | |
1 These statistics are up to 28 October 2007
2 These statistics exclude FY2006 and FY2007 acquisitions
Current Trading
For Winter 2007/08 and Summer 2008, demand across the group, for those businesses on sale, has remained encouraging.
UK consumer demand for leisure travel remains strong, reflecting higher demand for overseas holidays following poor weather conditions in Summer 2007. Consumers continue to view overseas travel as an integral part of their annual expenditure, a fact validated by the results of our annual survey of customers’ attitudes on overseas travel and spending. This survey confirmed, for the third year running, that 80% of customers consider their holiday to be a significant event in the year and not a luxury item, while 90% said they would not choose holidays as the primary area on which to cut spending. In Germany, we are also experiencing healthy demand as the strengthening economy, buoyed by improving employment rates and rising disposable income, stimulates consumer demand for our portfolio of travel products.
Strong demand for leisure travel in our markets is borne out in the encouraging forward trading position for both the Winter 2007/08 and Summer 2008 programmes.
Winter 07/08
Current Trading 1
|
y-o-y variation% |
Winter 07/08 Sales |
Winter 07/08 Customers |
Winter 07/08 Capacity |
|---|---|---|---|
| MAINSTREAM | |||
| Northern Europe | |||
| First Choice UK | |||
| Short-haul | -1 | -6 | -22 |
| Medium-haul | +24 | +15 | -10 |
| Long-haul | +22 | +18 | +2 |
| First Choice UK | +20 | +13 | -10 |
| TUI UK | |||
| Short-haul | -13 | -26 | -29 |
| Medium-haul | +21 | +13 | +3 |
| Long-haul | -5 | -12 | -14 |
| TUI UK | +2 | -7 | -11 |
| UK Mainstream – Total | +7 | -2 | -11 |
| TUI – Nordic | +19 | +16 | +12 |
| Northern Europe – Total | +10 | +2 | -6 |
| Central Europe | |||
| TUI – Germany | +8 | +11 | - |
| TUI – Austria | -3 | +2 | - |
| TUI – Switzerland | +27 | +25 | - |
| TUI Central Europe - Total | +9 | +12 | +1 |
| Western Europe | |||
| TUI – France | +4 | -6 | - |
| TUI – Belgium | +11 | +17 | - |
| TUI – Netherlands | +21 | +9 | - |
| TUI Western Europe | +6 | +4 | +3 |
| SPECIALIST2 | +4 | +6 | |
| ACTIVITY2 | +11 | n/a | |
| ODS3 | +62 | +40 | |
1 These statistics are up to 28 October 2007
2 These statistics exclude FY2006 and FY2007 acquisitions
3 Laterooms.com – Winter season is not significantly sold at this point in time
As we enter the peak selling period for the Winter 2007/08 programme, we remain pleased with performance to date with load factors in the key source markets ahead of prior year.
UK Mainstream trading remains strong with total sales up 7% and margins tracking slightly ahead of last year. Volumes are down 2% on capacity reduced by 11%, primarily within the short-haul segment. First Choice continues to benefit from remixing its programme to differentiated medium-haul and long-haul product with sales up 24% and 22% respectively, with bookings driven by consumer demand for Egypt, Tunisia, Mexico and the Dominican Republic. Total capacity is down 10% primarily as the business reduces its Winter programme in the Canaries. Thomson sales are up 2% with 7% lower volumes on capacity reduced by 11%. Short-haul capacity for the season has been reduced by 29%, primarily as a result of scaling back loss making scheduled ‘city pair’ routes, on which capacity has been halved.
We are pleased with trading across the Nordics region, where margins are tracking ahead of last year, as demand for long-haul package holidays and differentiated content, such as the portfolio of Blue Villages, drive sales growth of 19%.
In both the Central Europe and Western Europe regions, we are experiencing strong growth with sales up 9% and 6% respectively, on capacity that is marginally up.
Within the Specialist sectors, demand for our portfolio of destination specialist businesses and activity adventure businesses remains strong, with sales up 4% and 11% on a like for like basis. In Canada, where market conditions are challenging, trading started more slowly than last year but has picked up in recent weeks, with the load factor for the peak months of January and February now in line with last year.
Summer 08
As we continue our post merger 100 day review, we are exiting unprofitable lines of business for Summer 2008 wherever possible, particularly within the short-haul segment in the UK and German source markets. As a result, UK capacity will be down 12% as we scale back the loss making scheduled flying programme within Thomson. As previously announced, capacity in Germany will be approximately 10% lower, following the return of eight aircraft for the Summer 2008 programme.
For Summer 2008, the UK & Ireland Mainstream and TUI Nordic programmes are the only businesses that have been on sale for any reasonable time period. Even though it remains early in the selling period, we remain encouraged by trading in the UK where sales are up 12% on volume growth of 6%. Margins in the UK & Ireland Mainstream business are slightly ahead of last year, despite continued cost pressures, particularly the year on year increase in fuel costs and APD recovery.
Currently, the First Choice programme remains 4 percentage points further sold than at the same point last year with sales 24% ahead on customer bookings that are up 18%. Both medium haul and long haul programmes are experiencing strong demand with sales up 36% and 17% respectively. In Thomson bookings are 1% down on capacity that has been reduced by 16%. The programme is 2 percentage points further sold than last year.
In the Nordic region, although it is early in the season, sales are up 23% on volume growth of 18%. The programme is 1 percentage point further sold than the prior year, with margins tracking ahead.
Integration Process
The integration process continues to progress in line with our expectations. On 29 January 2008, we will host an Investor Day at which we will present the conclusions of the first 100-day review, as well as updates on both the integration process and group strategy.
Proformas
TUI Travel PLC will issue proforma financial information for the 12 months ended 30 September 2007 and 30 September 2006 on 13 December 2007.
3rd Quarter Financial Results
TUI AG has today published its 3rd Quarter Interim Report. This report includes the results of the TUI AG Tourism division. It should be noted that the TUI AG Tourism division includes TUI Hotels & Resorts that do not form part of TUI Travel PLC.
The TUI AG 3rd Quarter Interim Report is based on the results of the TUI tourism division for the nine months to 30 September 2007 and First Choice Holidays for one month to 30 September 2007.
For ease of reference we have split out the TUI Hotels & Resort result in the table below. For completeness, we have also included, in Appendix 1 of this announcement, the extract from TUI AG’s 3rd Quarter Interim Report that covers both the relevant financial results and commentary for the Tourism division.
TUI AG Tourism Division Financial Results
Turnover by division
| € million | Q3 2007 | Q3 2006 | Var. % | 9M 2007 | 9M 2006 | Var. % |
|---|---|---|---|---|---|---|
| Central Europe | 2,161 | 2,138 | +1.1 | 4,798 | 4,597 | +4.4 |
| Northern Europe | 1,710 | 1,743 | -1.9 | 3,766 | 3,893 | -3.3 |
| Western Europe | 1,179 | 1,070 | +10.2 | 2,439 | 2,306 | +5.8 |
| Incoming Agencies | 115 | 108 | +6.4 | 224 | 197 | +13.5 |
| Other Tourism | - | - 3 | - | - 71 | - | |
| TUI Hotels & Resorts | 127 | 98 | +28.9 | 302 | 248 | +21.6 |
| First Choice1 | 500 | - | - 500 | - - | ||
| TUI Tourism (TUI AG) | 5,793 | 5,161 | +12.2 | 12,028 | 11,313 | +6.3 |
| Memorandum – Reconciliation to TUI Travel PLC results | ||||||
| TUI Hotels & Resorts | 127 | 98 | +28.9 | 302 | 248 | +21.6 |
| TUI Travel PLC | 5,665 | 5,062 | +11.9 | 11,727 | 11,064 | +6.0 |
1 First Choice Holidays PLC was consolidated for September 2007 only