TUI Travel warns on FY as budget measures hit UK

Europe’s biggest travel firm TUI Travel said it expected its full-year profit to be at the lower end of expectations after trading was hit by uncertainty among British consumers following June’s emergency budget.

TUI Travel, in which Germany’s TUI AG holds a controlling stake of 57.5 percent, also said airspace closures as a result of the ash cloud from an Icelandic volcano had affected bookings and cost it a total of £105m ($168m).

“The strong booking trends experienced up until the volcanic ash disruption in mid-April and the subsequent rebound in early May were not sustained throughout the early summer period,” said Chief Executive Peter Long.

“This was particularly marked in the UK source market where trading was affected by further airspace closures, good weather and post election uncertainty regarding the emergency budget,” he added.

TUI Travel said bookings in Britain, its second biggest market, were down two percent over the last twelve weeks while a trend among customers to buy discounted holidays in the late bookings market has impacted the group’s profitability. Trading in the Netherlands was also weak with bookings down three percent.

The group said its biggest market, Germany, had seen strong growth in bookings, which were up 12 percent, but customers had been buying cheaper holidays which have a lower profit margin.

Long said it was difficult to predict how the later booking pattern will change over the next 12 to 18 months in light of the current economic environment.

Analysts forecasts for full-year EBIT (earnings before interest and taxation) range between £439m and £495m, according to a poll.


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