TUI Travel Profit Hits Record High As Rival Falters

December 5, 2011

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TUI Travel, Europe's biggest tour operator, reported full-year profit at the top end of forecasts, boosted by strong online sales and demand for exclusive resorts and offering a stark contrast to struggling rival Thomas Cook.

"Even in the current challenging market conditions, we continue to operate from a position of strength," chief executive Peter Long said on Monday.

"We have self-help measures in place to help offset the difficult macroeconomic environment, including clear plans for Germany and France," he said, without giving further details.

TUI Travel, which operates Thomson and First Choice, said operating profit for the year to September rose 18 percent to a record GBP£471 million (USD$736 million).

TUI Travel, majority-owned by German group TUI said on Monday it had achieved record profits in Britain, the Nordic region, Belgium, the Netherlands, Canada and Austria, despite a backdrop of unrest in key North African destinations and weak consumer sentiment in some source markets.

Thomas Cook has endured a torrid 2011 and faces an uncertain future as it battles to regain the confidence of travellers and investors after securing a rescue package from its lenders.

RBS said TUI's performance was very strong in a difficult year for the consumer generally and especially for holiday companies faced with North African disruption.

It added it expected TUI Travel to benefit from Thomas Cook's distress in the critical post-Christmas trading period when the majority of customers book their holidays.

"We expect TUI Travel to benefit from any fall-out as being the most trusted alternative brand and we further expect TUI Travel to continue with its aggressive marketing campaign," RBS said in a research note.

TUI Travel has looked to cash in on its rival's misfortune, placing advertisements in national newspapers stating: "Another holiday company may be experiencing turbulence, but we're in really great shape."