TUI Travel PLC Trading Update
05 Oktober 2010 - 8:00AM
UK Regulatory
TIDMTT.
RNS Number : 8420T
TUI Travel PLC
05 October 2010
5 October 2010
TUI Travel PLC
Trading Update
Highlights
+-------+----------------------------------------------------------------+
| · | Summer 2010 has traded well since our last update. |
| | |
+-------+----------------------------------------------------------------+
| · | Confident that full year results will be in line with previous |
| | guidance. |
| | |
+-------+----------------------------------------------------------------+
| · | Trading for Winter 2010/11 has further strengthened across all |
| | source markets. |
| | |
+-------+----------------------------------------------------------------+
| · | Summer 2011 trading has started well in the UK and Nordics |
| | (the two source markets currently on sale). |
| | |
+-------+----------------------------------------------------------------+
| · | Net debt is expected to be lower than previous guidance due to |
| | a strong working capital performance following improved recent |
| | trading trends and increased management focus on cash. |
+-------+----------------------------------------------------------------+
Peter Long, Chief Executive of TUI Travel PLC, commented
"Since our last update, we have performed well in the lates market for Summer
2010 and the majority of our programmes are now almost fully sold. This shows
that demand for our holidays remains healthy despite the previously highlighted
shift towards a later booking trend in the UK. The failure of a number of
smaller tour operators and airlines has once again emphasised to holiday makers
the security that travelling with a leading tour operator brings. We have
benefited from this flight to quality as well as the return to more normal
weather conditions across Northern Europe after the earlier period of good
weather.
The positive trading trends for future seasons have continued. Booking activity
has accelerated across all source markets in recent weeks for Winter 2010/11 and
trading for Summer 2011 has started well. Demand is particularly strong for our
differentiated products, validating our strategy of offering unique holiday
experiences. However, whilst these trends are encouraging, at this relatively
early point in the booking cycle we retain our prudent view on the outlook for
the coming financial year.
We continue to believe that our strategy of focusing on differentiated products,
turning around underperforming businesses and growth initiatives will enable us
to achieve our medium term margin roadmap. We are also continuing to review
areas of our cost base to increase our competitiveness and further underpin
delivery of our targets".
Current Trading
Summer 2010
Our Summer 2010 programmes, which run to the end of October in most source
markets, are now almost fully sold. All markets have experienced strong booking
activity in recent weeks. In the UK, where we reported a shift in booking
patterns towards later sales, trading in the lates market since our last update
has been good, but the increased lates mix has affected profitability as per our
previous guidance.
+-------------+------------+-----------+------------+
| YoY | Cumulative | Bookings | Cumulative |
| customer | bookings | since | bookings |
| booking | at 1 Aug | previous | at 26 Sept |
| variation | | trading | |
| % | |statement | |
+-------------+------------+-----------+------------+
| | | | |
+-------------+------------+-----------+------------+
| UK | +2 | +5 | +2 |
+-------------+------------+-----------+------------+
| Nordic | +17 | +15 | +17 |
| Region | | | |
+-------------+------------+-----------+------------+
| Germany | +3 | +18 | +5 |
+-------------+------------+-----------+------------+
| France | +10 | +18 | +11 |
+-------------+------------+-----------+------------+
| Belgium | +2 | +30 | +4 |
+-------------+------------+-----------+------------+
| Netherlands | -4 | +11 | -2 |
+-------------+------------+-----------+------------+
+-------------+--------+--------+-----------+----------+
| Current | Summer 2010 | |
| Trading | | |
| 1 | | |
+-------------+-----------------------------+----------+
| | | |
+-------------+-----------------------------+----------+
| YoY | Total | Total | Total | |
| variation% | ASP | Sales |Customers | |
+ + + + +----------+
| | | | | |
+-------------+--------+--------+-----------+----------+
| | | | | |
+-------------+--------+--------+-----------+----------+
| MAINSTREAM | | | | |
+-------------+--------+--------+-----------+----------+
| Northern | | | | |
| Region | | | | |
+-------------+--------+--------+-----------+----------+
| Short-haul | +11 | -2 | -12 | |
+-------------+--------+--------+-----------+----------+
| Medium-haul | +5 | +16 | +10 | |
+-------------+--------+--------+-----------+----------+
| Long-haul | +9 | +28 | +18 | |
+-------------+--------+--------+-----------+----------+
| UK | +10 | +13 | +2 | |
+-------------+--------+--------+-----------+----------+
| | | | | |
+-------------+--------+--------+-----------+----------+
| Nordic | +1 | +19 | +17 | |
| Region | | | | |
+-------------+--------+--------+-----------+----------+
| Northern | +9 | +13 | +4 | |
| Region | | | | |
+-------------+--------+--------+-----------+----------+
| | | | | |
+-------------+--------+--------+-----------+----------+
| Germany | -2 | +3 | +5 | |
+-------------+--------+--------+-----------+----------+
| Austria | -1 | -1 | Flat | |
+-------------+--------+--------+-----------+----------+
| Switzerland | -1 | +1 | +2 | |
+-------------+--------+--------+-----------+----------+
| Poland | -5 | +23 | +30 | |
+-------------+--------+--------+-----------+----------+
| Central | -2 | +3 | +5 | |
| Europe | | | | |
+-------------+--------+--------+-----------+----------+
| | | | | |
+-------------+--------+--------+-----------+----------+
| France | +1 | +12 | +11 | |
+-------------+--------+--------+-----------+----------+
| Belgium | -3 | +1 | +4 | |
+-------------+--------+--------+-----------+----------+
| Netherlands | +2 | Flat | -2 | |
| | | | | |
+-------------+--------+--------+-----------+----------+
| Western | Flat | +5 | +5 | |
| Europe | | | | |
+-------------+--------+--------+-----------+----------+
| | | | | |
+-------------+--------+--------+-----------+----------+
| SPECIALIST | +4 | Flat | -4 | |
+-------------+--------+--------+-----------+----------+
| ACTIVITY | NA | +4 | NA | |
+-------------+--------+--------+-----------+----------+
| A&D2 | +4 | +31 | +27 | |
+-------------+--------+--------+-----------+----------+
| | | | | |
+-------------+--------+--------+-----------+----------+
1 These statistics are up to 26 September 2010 and are shown on a constant
currency basis
2 These statistics refer to online businesses only; Sales
refers to total transaction value (TTV) and customers refers to roomnights
Winter 2010/11
We have seen good recent trading trends across all source markets, with
particularly strong demand for our differentiated products. In line with our
product strategy, we have expanded our portfolio of unique holidays and this is
driving booking activity. To increase our differentiation, we have expanded
existing concepts (e.g. Club Nouvelles Frontières in France), launched new
concepts (e.g. Thomson Couples in the UK) and further increased co-operation
between source markets (e.g. export of the Sensatori, Splash and Holiday Village
concepts from the UK to the Nordic region).
It remains relatively early in the booking cycle in most source markets (load
factors: UK 31%, Nordics 60% and Germany 35%), but we are encouraged by trading
to date.
+-------------+--------+--------+------------+--------+-----------+--------+
| Current | Winter 2010/11 | | | |
| Trading | | | | |
| 1 | | | | |
+-------------+------------------------------+--------+-----------+--------+
| | | | |
+-------------+------------------------------+--------+--------------------+
| y-o-y | Total | Total | Total | | Risk Only |
| variation% | ASP2 |Sales2 |Customers2 | | |
+ + + + + +--------------------+
| | | | | | Capacity3 | Left |
| | | | | | | to |
| | | | | | | sell3 |
+-------------+--------+--------+------------+--------+-----------+--------+
| | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| MAINSTREAM | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| UK | +10 | +17 | +7 | | +5 | +3 |
+-------------+--------+--------+------------+--------+-----------+--------+
| Nordic | -1 | +33 | +35 | | +18 | Flat |
+-------------+--------+--------+------------+--------+-----------+--------+
| Northern | +5 | +23 | +17 | | | |
| Region | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Germany | +1 | +12 | +12 | | +6 | +2 |
| | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Austria | +9 | +4 | -5 | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Switzerland | +1 | -5 | -6 | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Central | +1 | +11 | +10 | | | |
| Europe | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| France | +3 | +17 | +14 | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Belgium | -4 | +12 | +16 | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Netherlands | +5 | +18 | +13 | | | |
| | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| Western | +1 | +16 | +14 | | | |
| Europe | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| ACTIVITY | NA | +8 | NA | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
| | | | | | | |
+-------------+--------+--------+------------+--------+-----------+--------+
1 These statistics are up to 26 September 2010 and are shown on a constant
currency basis
2 These statistics relate to all customers whether risk or
non-risk
3 These statistics include all risk capacity programmes
With the exception of the Nordic region, where following the strong summer
trading we have reinstated capacity that was withdrawn last winter, underlying
capacity is expected to be flat. The Nordics capacity increase has partly been
achieved through the use of an additional long haul aircraft from our airline in
France to take advantage of higher returns than are currently available in that
market. In the UK, as a result of a change in the fleet mix in Canada from B757s
to smaller B737s, which results in a higher number of B757s in the UK, reported
capacity is 5% higher in the season. In Germany, due to the late timing of
Easter we are commencing certain summer destinations earlier than usual in
response to demand, and as these departure dates are reported as part of the
winter season, reported 'winter' capacity is therefore up 6%. Adjusting for this
effect, underlying winter capacity is flat.
Summer 2011
Early trading for Summer 2011 has started well in the UK and the Nordic region
(the two source markets currently on sale).
In the UK, total booking volumes are up 5% versus the prior year, with
differentiated product volumes up 17%, and our current expectation is for flat
capacity. Furthermore, after a number of years where the UK business has had to
pass through significant cost inflation (driven by fuel, currency rates and
departure taxes) Summer 2011 is expected to have minimal cost inflation, (based
on achieved hedged rates and current forward rates).
In the Nordic region, booking volumes are up 18%, again driven by our portfolio
of differentiated properties.
Cash flow / Net Debt Performance
Net debt at 30 September 2010 is expected to be better than previous guidance
following a strong working capital performance, driven by:
+-------+---------------------------------------------------------------+
| · | Increased customer payments received in advance following |
| | strong booking activity for future seasons; and |
| | |
+-------+---------------------------------------------------------------+
| · | Ongoing implementation of cash management initiatives, |
| | including: increased deposit levels and early payment of |
| | final customer balances; renegotiations with suppliers, |
| | particularly on hotel prepayments; and management focus on |
| | cash. |
+-------+---------------------------------------------------------------+
Cost Reduction Initiatives
We continue to review areas of our cost base across our businesses and central
functions to increase our competitiveness and further underpin delivery of our
targets. Further to this review, we now expect to incur additional charges for
certain restructuring costs in respect of Corsair and the UK in the financial
year ended 30 September 2010. These charges will be reported as separately
disclosed items and will not affect our previous cash flow guidance for the
year. We will provide further information on the benefits of these items in due
course.
Preliminary Results
TUI Travel PLC will announce its preliminary results for the year ended 30
September 2010 on 2 December 2010.
Enquiries
+------------------------------------------+------------------------+
| Analysts and investors: | |
+------------------------------------------+------------------------+
| Paul Bowtell, Chief Financial Officer | Tel: 01293 645 713 |
+------------------------------------------+------------------------+
| Andy Jones, Director of Finance & | Tel: 01293 645 795 |
| Investor Relations | |
+------------------------------------------+------------------------+
| Paul Rushton, Head of Investor Relations | Tel: 01293 645 795 |
+------------------------------------------+------------------------+
| | |
+------------------------------------------+------------------------+
| Press: | |
+------------------------------------------+------------------------+
| Lesley Allan, Corporate Communications | Tel: 01293 645 774 |
| Director | |
+------------------------------------------+------------------------+
| Michelle Jeffery, Corporate | Tel: 01293 645 776 |
| Communications Manager | |
+------------------------------------------+------------------------+
| Hudson Sandler (Michael Sandler / Kate | Tel: 020 7796 4133 |
| Hough) | |
+------------------------------------------+------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
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