Thomson Holidays’ owner hails a welcome break

THOMSON Holidays owner TUI Travel is tipped to post narrower losses this week and further distance itself from woes at rival Thomas Cook.

Europe’s biggest tour operator has dealt with tough conditions in the UK by cutting capacity, hiking prices and focusing more attention on exclusive holiday packages.

When it last updated the market, in March, TUI noted that summer bookings had improved and were down 6 per cent compared to a 7 per cent decline at the end of January – a trend that is expected to have continued.

The group has benefited from the troubles at Thomas Cook, which has seen confidence hit after it was forced to turn to its banks for additional support.

Thomas Cook recently reported a 2 per cent decline in summer bookings in March, compared to a 1 per cent fall the previous month.

TUI has capitalised on its rival’s woes by launching adverts proclaiming: “Another holiday company may be experiencing turbulence, but we are in really great shape.”

The group is expected to report a slight reduction in losses in the three months to 31 March, after an increase in the previous quarter when the Arab spring hit demand for trips to North African spots such as Egypt and Tunisia.

The City will be looking to see whether this trend has continued and if concerns surrounding the UK economy, which slipped back into recession in the first quarter, have dented demand.

Ed Birkin, an analyst at Barclays, has forecast an underlying quarterly loss of £221 million, some £2m less than a year earlier.

He said the firm’s growing share of the market in the UK means the division can return to underlying growth in the full-year, helping compensate for continued weakness in France. Full-year profits are forecast to rise by £10m to £481m. The first half of the year is normally loss-making for TUI with the bulk of its revenues resulting from the key summer period.