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TUI And Thomas Cook Results Show Strong Growth In UK Sales

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TUI AND THOMAS COOK RESULTS
Brits are bagging holiday bargains despite the economic climate, helping Thomas Cook and Tui to stronger sales in the UK | Alamy

Two of Britain's best known holiday makers have reported a surge in sales in the UK, suggesting that while Brits may be struggling with cash constraints, they're not willing to give up on the family holiday.

Thomas Cook, which is in the middle of a business overhaul at the moment, reported stronger operating performances in the UK, as well as Germany and the Nordics.

The company said its pre-tax loss in the three months to the end of 2012 was £151.7 million - an improvement of more than 15% on the loss reported in the same period the year before.

Over the last two years, Thomas Cook has issued a string of profit warnings and been forced to renegotiate its bank loans, but the company's fortunes have been improving since its new chief executive took over in May - reducing its debt by £86m in the past year.

Industry outsider Harriet Green oversaw a string of disposals to slash its debt, including the sale of its Indian business and several Spanish hotels.

Progress on the UK turnaround plans are described as "on track"; it's made savings of £60m so far and is predicted to make a further £60m of incremental savings during 2012/13.

Tui meanwhile, which owns First Choice and Thomsons, has revealed a 9% hike in summer bookings in the UK, with a third of its mainstream summer holidays already sold.

Sales of unique holidays (differentiated and exclusive product combined) are up 3% compared with this time last year and account for 78% of holidays sold to date, Tui said. Online sales continue to grow, accounting for 46% of Winter holidays booked.

Despite this, Tui reported a 12% increase in its loss before tax to £178m in the last three months of 2012. Sales in Germany and France are down, partly due to reductions in capacity to Egypt and a number of long-haul destinations.

"Tui and Thomas Cook are making encouraging noises, spurred by the apparently boundless determination of Brits and Nordics to hang onto their holidays, no matter what the ongoing economic crisis might be doing to their disposable incomes," said Nick Hood, business analyst for Company Watch.

"It seems they have both gained market share and increased margins, while they have equally optimistic outlooks for the short and medium term. But that's where the similarity ends. This is a tale of two balance sheets: Tui with a solid if unexciting financial base and acceptable debt levels; Thomas Cook with low net worth, high intangible assets and stubbornly persistent leverage.

"And crucially, Tui is profitable, while Thomas Cook is not as yet. Harriet Green is making progress with an ambitious turnaround plan, but full financial rehabilitation is still a long way off."

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