Tui Travel says it has been surprised by a recent increase in demand for holidays, which has been strong enough to boost the number of summer vacations it offers to customers in the UK and Nordic region. Like rival Thomas Cook, Tui Travel cut the number of holidays it offered during the recession to support profit margins. Both have been aided by the collapse of smaller rivals, which helped them maintain prices. Peter Long, Tui Travel chief executive, said the group's consumer research has shown that greater optimism about the jobs markets and personal finances was now being backed up by bookings.
"We have seen strong demand for late winter bookings and a strong demand for the summer." Summer 2010 capacity has been increased by 3 per cent in the UK and 11 per cent in the Nordic region. Mr Long, who has been bearish about the UK economy in recent months, described the change in public mood as "positive, but surprising". He added: "I don't think people are going gung-ho but the increasing expenditure is significant."
Tui said second-quarter profitability was showing better returns than in the first quarter, in which it incurred a pre-tax loss of £166m, compared with a deficit of £89m a year earlier. Sales during its first quarter - the final three months of 2009 - were £2.5bn, down 8 per cent year-on-year. The decline reflected capacity reductions that were partially offset by currency movements.
The underlying operating loss trebled to £107m. Tui usually makes a loss in the first half of its financial year because of the importance of the summer season. This seasonal trend was exacerbated in the first quarter of 2009-10 by capacity cuts.