LONDON: Europe's biggest tour operator TUI Travel Plc is confident of meeting its expectations for 2010 as trading for the summer season remains encouraging and winter bookings improve.

TUI Travel, formed in 2007 through a tie-up between TUI AG's travel division and Britain's First Choice, said yesterday pretax profit for the year to the end of September increased 15 percent to 366 million pounds ($602.9 million), in line with expectations.

The consensus forecast had stood at 365 million according to a Thomson Reuters poll of 18 analysts.

"Despite the challenging economic environment we have delivered strong earnings growth, demonstrating the resilience of our business model and the effectiveness with which we have developed merger synergies," said TUI Travel Chief Executive Peter Long.

"Against a backdrop of reduced consumer confidence, the main summer holiday is an essential expenditure. We have managed capacity carefully for the current winter season and remain confident we can meet our board's expectations for 2010."

The consensus forecast for 2010 pretax profit stands at 376 million pounds, according to a Thomson Reuters poll of 19 analysts.

On Monday, Europe's second-biggest tour operator, Thomas Cook, warned trading conditions could become even more challenging in 2010 though it was confident of meeting market expectations for the year.

TUI Travel and Thomas Cook have reduced the number of holidays they sell by more than a quarter in the last two years, enabling them to increase average selling prices and avoid having to offer heavy discounts at the last minute to sell unwanted holidays.

The strategy has helped both groups lift profits and margins through the recession, while smaller operators have struggled to stay afloat. Britain's third-biggest travel firm, XL Leisure, fell into administration last year.

TUI Travel said summer 2010 bookings had been encouraging.

Average selling prices were up 7 percent with bookings down 3 percent. The group is planning for flat capacity for the season.

It said trading for winter 2009/10 had continued to improve in all its markets despite challenging market conditions.

The company is on track to deliver 200 million pounds of merger-related cost savings by 2011.

The group is paying a final dividend of 7.7 pence per share, making a total of 10.7 pence, up 10 percent.

Shares in TUI Travel were up 0.2 percent at 246.5 pence at 0807 GMT.

Reuters

(China Daily 12/02/2009 page16)