Travel firms boosted after collapse of operator XL
Tour operators Thomas Cook and TUI Travel posted strong trading updates today as the pair showed signs of benefiting from the collapse of rival operator XL.
Thomas Cook described early indications for next summer as "encouraging" and said the reduction in capacity as a result of fewer operators in the sector had improved the company's outlook.
Thomson owner TUI Travel told a similar story and said it had taken steps to eliminate unprofitable capacity.
Shares in Thomas Cook opened 4% higher, while TUI shares were unchanged.
Thomas Cook said it was on track to meet expectations for the current financial year, which ends tomorrow.
It said it had 24% fewer holidays to sell than this time last year, while average selling prices were 15% ahead over the last four weeks compared with a year earlier.
Trading for the winter season has also been in line with expectations, with business "particularly strong" in the UK.
It said flexibility in capacity, its cost base and fuel hedging meant it would be able to adapt to changes in demand for the summer 2009 season.
Thomas Cook chief executive Manny Fontenla-Novoa said: "Package holidays are proving resilient and the strong position we have built in medium haul is proving particularly beneficial in this economic environment."
Thomas Cook, Europe's second-biggest travel firm, also announced that it had withdrawn from talks over a potential merger of its airline Condor, with TUI Travel's TUIfly and Lufthansa's Germanwings.
It said the proposed three-way airline merger was “not attractive.''
The group said trading this summer had been strong, and added that it was confident it was on track to meet its expectations for the full year to the end of September.
Thomas Cook, which is based in Peterborough, reported that its winter 2008/9 trading was in line with its expectations and particularly strong in the UK.
For summer 2009, it said it had flexibility in capacity, cost base and fuel hedging to enable it to adapt for changes in demand.
Thomas Cook and its rival TUI Travel have been cutting capacity, leaving them with fewer holidays to sell and enabling them to avoid deep discounting on late bookings.
The group said 92% of its fuel requirements were hedged for winter 2008/9 and summer 2009 seasons to protect it against cost fluctuations.