Tui Travel takes swipe at Cook in positive trading update
TTG Staff
Tui Travel has taken a swipe at Thomas Cook, accusing its rival of resting on its laurels, after reporting a bumper end to summer season in one of its largest source markets.
The tour operator posted its pre-close trading update last week, revealing a strong performance in both the UK and Germany.
In the UK, Tui Travel said 98% of its programme had been sold for summer 2014. This compared favourably with Germany - where 97% was sold, but its overall mainstream bookings for the latter were up 9%, with higher margins.
By contrast, Cook said that its bookings in Germany had “moderated”, leading to “weaker margins in the fourth quarter”, despite reporting “strong late summer 2014 bookings” in its major source markets.
Tui’s chief financial officer William Waggott said unlike its rival, it had introduced improvements to help mitigate the impact of the World Cup in Germany, as the nation stayed glued to their TV screens.
“It wasn’t that bad for us before the World Cup because we’ve done a lot to our product this year in terms of changing the product on the airline, changing the pricing model on ‘1-2-Fly’,” he said.
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"I don’t think they’ve done as much to their product. If you sit back and don’t do anything, the market gives you the wrong answer"
“We did an awful lot to both the cost base and therefore the margins of our summer business before the World Cup bounce, so it was OK before then as well.”
However, when quizzed about Cook’s earlier trading update, Waggott replied: “I don’t think they’ve done as much to their product this year as we have. If you sit back and don’t do anything, the market gives you the wrong answer.”
The German market is Tui’s largest in terms of passenger number and third in earnings. Cook describes Germany and the UK as its largest source markets.
Tui’s strong summer performance, which saw the season ending with higher average selling prices across the mainstream sector, was overshadowed slightly by the news it will make a £27m provision for loans associated with its joint venture in Ukraine and Russia.
The group expects to report operating profit growth of at least 9% on a constant currency basis. Its previous assessment had anticipated a 7-10% operating profit growth.
Thomas Cook declined to comment.
TTG Staff
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