TT. Tui Travel

U.K.-based travel operator TUI Travel PLC (TT.LN) Wednesday said demand for leisure holidays was continuing to improve strongly and it's well positioned to meet the board's expectations for the current fiscal year ending Sep. 30.

Europe's biggest travel operator by market capitalization had said in early February that bookings were improving, and Wednesday said they had continued to improve since then. Cumulative bookings in the U.K., its biggest market are up 13% in the six weeks to Mar. 14, and have risen 23% in the Nordics.

Like rival Thomas Cook Group PLC (TCG.LN), TUI Travel was hit hard by the economic downturn, seeing revenues decline as it cut the number of holidays on offer in response to the fall in demand. The reduction in capacity helped the companies protect their prices and margins.

TUI Travel Chief Executive Peter Long has put the recovery down to consumers being more confident about keeping their jobs, coupled with recent snow and poor summer weather encouraging people to travel abroad.

TUI Travel, whose brands include Thomson, First Choice and Airtours, said it had sold almost all the available holidays for this winter, and had experienced strong prices for late bookings because few holidays remained. It added that it had achieved planned load factors. The winter season runs until the end of April.

For the summer, trading remains strong, with improvements in cumulative booking volumes in most source markets in recent weeks.

It said average selling prices are up 9% on the year in the U.K., while it has further increased capcity in the Nordics--now up 12% compared with the previous 11% increase. It said it had done this through additional deals with third-party airlines, which remain flexible.

In early February, the company had said it expected profitability to improve each quarter this year due to improving demand, its exit from scheduled flying in Germany, benefits from its venture in Canada and thanks to further synergies from the merger that created the company.

It reiterated that it expects to make "significant progress" in the second quarter for these reasons, and is well positioned to meet the board's expectations for the fiscal year.

"We are encouraged by recent strong trading trends and are confident as we move towards the summer season that we will continue to see strong demand and a recovery in earlier booking patterns," it said.

At 0812 GMT, TUI Travel's shares were up 6 pence, or 2%, at 310 pence, the third-biggest percentage increase on the FTSE 100, which was up 0.4%. The stock has risen 21% in the year to date on hopes for an improvement in the travel market.

Thomas Cook had the biggest gain on the index Wednesday, up 3%. Its stock has risen 14% so far this year.

-By Steve McGrath, Dow Jones Newswires; 44-20-7842-9284; steve.mcgrath@dowjones.com

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