TUI suffers as cuts dent holiday sales

 
City A.M. Reporter
TUI Travel saw its London-listed shares plunge by almost ten per cent yesterday after the Thomson Holidays owner said bookings had fallen over the third quarter of its fiscal year.

Europe’s largest travel operator said airspace closures due to the volcanic ash crisis, coupled with uncertainty caused by government Budget cuts, had hit its business hard. The good weather in the UK also encouraged more people to have so-called “staycations” in Britain, leading to a 10 per cent dip in booking volumes in the three months to the end of June compared with last year. Revenue fell to £3.4m, from £3.6m a year ago.

TUI chief executive Peter Long said: “The strong booking trends experienced up until the volcanic ash disruption in mid-April and the subsequent rebound in early May were not sustained in the early summer period.

“In the UK, the market has slowed markedly following the recurrence of airspace closures, the emergency Budget and subsequent austerity measures, and the better than average UK weather, combined with quiet trading during the World Cup.”

Bookings in the Netherlands were also lower than a year earlier, but those in other key European markets increased.

The company said its winter holiday schedule had started well with bookings for the last four weeks up 22 per cent.

Analyst Richard Hunter at Hargreaves Lansdown said: “The current trading position has marginally improved, although management remains understandably cautious for full-year prospects. The third quarter update follows on from a first half loss in May.”