TUI Travel reduces losses

The company said that it would be increasing its full year dividend by 10 per cent to 10.7 pence per share.

The merger of TUI AG’s travel division and of First Choice generated £120 million in synergies, although at the cost of increasing net debt from £136 million to £338 million. TUI said it was on target to deliver £200 million in synergies by 2011.

In the last year TUI said it had made 11 bolt-on acquisitions in specialist sectors. In addition the company managed to raise £490 million through a convertible bond and additional bank facility.

Trading this Winter has been continuously improving, the company said, despite challenging market conditions. Load factor for next Summer was reported as being in line with last year, while average selling prices have increased seven per cent year on year.

Peter Long, Chief Executive of TUI Travel, said, “We are very pleased with the performance of the Group in the second year as a merged company. Despite the challenging economic environment we have delivered strong earnings growth, demonstrating the resilience of our business model and the effectiveness with which we have delivered merger synergies.

“Our customers’ behaviour has demonstrated that even against a backdrop of reduced consumer confidence, the main summer holiday is an essential expenditure. We have managed capacity carefully for the current winter season and as a result remain confident that we can meet our Board’s expectations for 2010.”

By 9:42 am shares in TUI Travel were down by 0.24 per cent to 245.30 pence per share.

Yesterday fellow travel company Thomas Cook announced a better than expected drop in profits thanks to higher ticket prices.