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Tui Travel profits rise as package holidays make a comeback Tui Travel profits rise as package holidays make a comeback
(about 7 hours later)
Package holidays are "back in vogue" according to Tui Travel as strong demand boosted underlying profits to record levels. Package holidays are back in vogue, according to Tui Travel, as strong demand boosted underlying profits to record levels.
The company behind the Thomson and First Choice brands said Britons were unwilling to give up their holidays despite straitened times, driving a 21% increase in underlying pre-tax profits to £473m in the year to 30 September. Pre-tax profit fell 9.9% to £181m. The company behind the Thomson and First Choice brands said Britons' unwillingness to give up their holidays despite straitened times had driven a 21% increase in underlying pre-tax profits, to £473m in the year to 30 September. However, when one-off charges and restructuring costs were included, pre-tax profit fell 10%, to £181m.
Europe's largest tour operator said it was benefiting from a focus on its "unique holiday" offers, with value added services and improved flight experience. Demand for such holidays was particularly strong in the UK, where underlying operating profits improved by £54m to £251m, boosting margins by 1.1 percentage points to 6.5%. Europe's largest tour operator said it was benefiting from a focus on its "unique holiday" offers with value-added services and improved flight experience. Demand for such holidays was particularly strong in the UK, where underlying operating profits improved by £54m to £251m, boosting margins 1.1 percentage points to 6.5%.
Chief executive Peter Long said it had been an "outstanding" year for the group, and told BBC Radio 4's Today programme it was a sign that package holidays are "back in vogue". The chief executive, Peter Long, said the group had had an outstanding year.
"The package holiday is very much back in vogue again. Fundamentally, what it's saying is that customers are not going to forgo their overseas summer break because they need that to recharge the batteries," he told BBC's Radio 4's Today programme.
Tui said winter 2013/14 bookings were in line with expectations, with 60% of the programme sold.Tui said winter 2013/14 bookings were in line with expectations, with 60% of the programme sold.
Following unrest in Egypt, the company reduced the number of holidays it offered in the country in response to falling demand. Turkish destinations now account for less than 5% of winter 2013/14 holidays. After the unrest in Egypt, the company reduced the number of holidays it offered in the country in response to falling demand. Egyptian destinations now account for less than 5% of winter 2013/14 holidays.
The travel company said it was "pleased" with summer 2014 trading despite strong comparatives from the previous year, with around 13% of the programme sold. The company said it was "pleased" with summer 2014 trading despite strong comparatives from the previous year, with around 13% of the programme sold.
Underlying operating profit jumped 20% to a record £589m and the company said it was confident of delivering its target of underlying operating profit growth of between 7% and 10% over the next five years. Long said that while the UK economy was improving, the company was focused on offering value for money as customer finances remained squeezed.
"UK consumer sentiment is improved but our customers' income is still under pressure, and particularly disposable income."
He said all-inclusive holidays were still very popular as they offered "complete certainty" of cost.
Tui was the first UK operator to fly customers on the Boeing 787 Dreamliner, and Long said the company was getting "phenomenal feedback" after deliveries were initially delayed by the safety concerns associated with the aircraft's lithium-ion batteries.
The Dreamliner flies to some of Tui's popular long haul destinations, including Cancún in Mexico, Florida, and the recently launched Thailand.
France proved more of a challenge for Tui, with underlying operating losses widening to £60m from £47m over the year. Long said it reflected a "perfect storm" in Europe's second largest economy, which is on the verge of slipping back into recession and where demand for travel to North Africa - traditionally a popular destination for French tourists - is low.
Overall, the group's underlying operating profit jumped 20% to a record £589m and the company said it was confident of delivering its target of underlying annual operating profit growth of between 7% and 10% over the next five years.
Revenue increased by 4% to £15bn over the full year, and the board recommended a dividend of 9.75p a share, taking the total dividend for the year to 13.5p a share, up 15%.Revenue increased by 4% to £15bn over the full year, and the board recommended a dividend of 9.75p a share, taking the total dividend for the year to 13.5p a share, up 15%.
Long said there was "huge demand" for tablet-enabled services from customers. Its digital app was launched during the year in the UK and Germany, receiving almost 200,000 downloads to date. Long said there was "huge demand" for tablet-enabled services from customers. The company's digital app was launched during the year in the UK and Germany, receiving almost 200,000 downloads to date.
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