TUI announces record profit but cuts capacity
TUI Travel made a record operating profit in 2011 of £471m, up 18% on the previous year, but announced it was chopping capacity by 9% for summer 2012.
It said its record earnings in the UK for the year ended 30 September were due to increased sales of differentiated and exclusive product.
However, it admitted 2012 would be a tough year, sales are running 11% down year on year, forcing it to cut capacity by 9%. But it insisted it would not follow rival Thomas Cook into the doldrums, saying the package holiday in the UK was "still alive and well".
TUI chief executive Peter Long said: "We are very pleased with our robust performance in 2011 and have delivered another year of profit growth, against a backdrop of unrest in key North African destinations and weak consumer sentiment in some source markets.
"The UK, Nordic region, Belgium, the Netherlands, Canada and Austria delivered record results. These achievements reflect the strength of our strategy to increase differentiated and exclusive product sales, increase controlled distribution with a focus on online to enhance our customer access and reduce distribution costs, and our delivery of the turnaround and cost efficiency programmes.
"We remain focused on this successful strategy and through our new business improvement programme we have self help measures in place to help offset the difficult macro-economic environment, including clear plans in place for Germany and France.
"In addition, we continue to strengthen our cash flow in order to fund the dividend and growth. All of which means that, even in the current challenging market conditions, we continue to operate from a position of strength."
TUI announced a final dividend of 8p per share, resulting in a full year dividend of 11.3p per share, up 3% on 2010.
With permission from Travelmole
Online holiday sales nudge ahead of high street bookings
TUI Travel admitted today that the company would close further high street shops as the internet becomes an increasingly important sales outlet for the business.
However, TUI is not planning widespread closures like rival Thomas Cook, even though agents now account for just 38% of its business while 40% comes via its website, said distribution director Nick Longman.
"There is no doubt we will see online growing, but travel agents will remain a very important sales outlet for us," added Longman. "We will continue to close shops where necessary but we are not looking at widespread closures and we believe High Street shops will continue to play a vital role in the sales process."
He said there was no danger the company would follow Thomas Cook in rapid closing high street shops as it is not suffering the same financial difficulties. TUI today announced an 18% rise in operating profit for 2011.
Longman pointed out the two companies operated very different business models. "Thomas Cook is primarily a travel retailer whereas we are holiday providers and we are focusing more and more on providing differentiated product that offer holiday experiences which people can't buy anywhere else," he said.
Differentiated holidays, such as Thomson Couples (aimed at 35-55 years olds), account for two-thirds of all its sales but the company is aiming to grow this to 80%, said Longman.
He said the company was excited by its long-term prospects beyond 2013 when it will become the first UK charter company to operate the Boeing 787, nicknamed the Dreamliner.
"With its increased range it will give us some exciting options, such as Vietnam. It can even fly to Hawaii, and the passenger onboard experience will be hugely different. With larger windows and mood lighting, passengers will suffer less jetlag. We are very excited about this."
With permission from Travelmole