UPDATE: TUI Travel Hikes Dividend, Even As Ash Hits Profit
11 Mai 2010 - 11:39AM
Dow Jones News
Europe's largest travel operator TUI Travel PLC (TT.LN) Tuesday
proposed a higher dividend despite posting a wider first-half loss
as it cut capacity to meet weak demand, and it warned that the
disruption caused by the volcanic eruptions in Iceland will hit
third-quarter profit.
The company said it will take a GBP90 million hit in the
third-quarter after suffering 12 days of disruptions due to
lingering clouds of volcanic ash clouds that forced the closure of
much of Europe's airspace for several days last month, but it still
expects to hit full-year targets.
"Despite the impact of the disruption, I expect positive
momentum in the second half of the year as strong underlying demand
improves trading and merger synergies continue to be delivered.
Excluding the impact from the volcanic ash disruption, I remain
confident that we can meet the board's original expectations for
2010," Chief Executive Peter Long said.
Airlines, airports and travel companies around the world have
been hit by the ash cloud, which forced the cancellation of more
than 100,000 flights. The volcano is still erupting and causing
sporadic airspace shutdowns in the U.K. and Ireland and the Iberian
peninsula as prevailing winds blow the ash southeast.
Long said that despite the widespread airspace closure in April,
which caused it to cancel 175,000 holidays and repatriate 180,000
customers, booking volumes strengthened in May and the company's
performance in its fiscal first half to end-March was in line with
its expectations as demand continued to improve.
Bookings for June departures, ahead of the World Cup, are up 7%
and Long said there was a trend for consumers to book earlier as
they become more confident about keeping their jobs.
Long added the company was monitoring the social upheaval in
Greece but noted that most disruptions were in the country's
capital, Athens, rather than on the Greek islands, which are
popular with holidaymakers.
Signalling its confidence, TUI Travel proposed an interim
dividend of 3.2 pence, 7% higher than the 3 pence it paid
shareholders last year.
The company's losses widened in the first half of the year,
although holiday companies traditionally post a loss during the
first half as the main holiday season occurs in the second half of
the year.
Its pretax loss, excluding amortization of business combination
intangibles and acquisition-related expenses, was GBP367 million,
compared with a loss of GBP333 million a year earlier. On an
operating level, losses increased to GBP314 million from GBP289
million last year after the company cut the number of holidays
available and experienced yield pressure at its French airline,
Corsair. Long said the company is reviewing the unit, which he said
was a "viable business," but he declined to comment on whether it
intends to exit the business.
Revenue for the period fell 8% to GBP5.38 billion. It will also
focus growth in Russia, Canada and its activities sector.
Its loss per share was 24.3 pence, wider than the 21.6 pence
posted a year earlier.
At 0844 GMT, TUI Travel's shares traded down 8 pence, or 3%, at
251 pence.
-By Kaveri Niththyananthan, Dow Jones Newswires; 4420 7842 9299;
kaveri.niththyananthan@dowjones.com
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