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Europe's largest travel firm shrugs off Egypt disruption TUI Travel posts a smaller loss in profits than expected, meeting a shift in demand for alternative destinations as North African unrest continues
TUI Travel, Europe's biggest tour operator, said it was on track to meet full-year expectations as increased demand for alternative destinations offset the impact of unrest in Egypt and Tunisia. The FTSE 100 company, majority owned by German group TUI AG , said on Tuesday disruption from troubles in Egypt and Tunisia had knocked 29 million pounds sterling (US$47 million) off first-half profit, compared with the 30 million pounds it anticipated. For the second half, TUI Travel expected to be able to fully mitigate the impact by increasing the amount of holidays on sale to alternative destinations. "The flexibility of our business model has allowed us to react quickly to mitigate the impact of the events in North Africa in the upcoming summer season," chief executive Peter Long said. "We have reshaped our programmes across all source markets to satisfy the shift in demand to alternative destinations including Spain, Greece and Turkey." In contrast, rival Thomas Cook Group had said on Monday the impact of unrest in the Arab world had been worse than previously thought. RBS analyst Jason Streets said TUI Travel's first-half performance had been positive compared with Thomas Cook. "It managed to report first-half losses better than last year despite the Arab Spring and the 'missing' Easter, a combination of improved profitability in the turnarounds and strong trading in the Nordics," Streets said. TUI Travel, whose brands include First Choice and Thomson, said its first-half performance and current booking position for the summer season left it well placed to meet expectations for the full year. Market expectations for full-year EBIT (earnings before interest and tax) were in a 447-493 million pounds range with an average forecast at 470 million, according to a Thomson Reuters I/B/E/S poll. TUI Travel said overall trading for summer 2011 remained satisfactory with booking volumes ahead of last year and margins in line with expectations. It made an underlying first-half operating loss of 307 million pounds, compared with a 322 million loss in the 2009/10 period and a forecast for 312 million, according to a poll provided by the company. Tour operators traditionally make a loss in the first half of the year, which does not include the key summer period.
