TUI profits take flight

The airline operator has made an impressive recovery. But the snow might not help...

by Emma Haslett
Last Updated: 05 Dec 2011
Fancy jetting away from the snow? TUI Travel, the company behind the likes of First Choice and Thomson, has reported a positively sizzling rise in operating profit for the year to September. The company, which has had a tough couple of years, says profits have jumped to £447m, up from £401m last year - smashing expectations, some of which were as low as £428m. But that doesn't mean it's got an easy ride from now on: according to analysts, consumers are expected to continue embracing the 'staycation' as the economy struggles to recover. And then, of course, there's this winter - which isn't looking promising so far...

The rise in profit is fairly unexpected, considering the year TUI has had. Not only was it struck down by bad weather at the beginning of the year, but it was also grounded for days when the Icelandic volcano struck in the summer, which cost it a fairly hefty £104m. But excluding those one-off expenses, its profit before tax rose from £324m last year to £337m this year. Not bad, considering airlines - particularly low-cost ones - struggled to perform through the recession.

It wasn't all good news, though. The airline said summer trading stayed weak as better-than-average weather in the UK (not to mention uninspiring exchange rates) encouraged people to stay at home, rather than jet off on holiday. The World Cup was also offputting, with most people staying in front of the telly with a couple of cans of beer, rather than going away. And it doesn't look like things are going to get much better: the number of tourists is expected to grow at a slower pace than usual next year as consumers spend less because of economies.

And today's snow probably isn't going to help. TUI chief exec Peter Long did an impressive job of convincing Sky News viewers that the closures of Gatwick and Edinburgh airports isn't a disaster, pointing out that the company is 'very good in crises, and I think we proved that very demonstrably earlier in the year'. Which is probably good - because, given that this is the third such incident so far this year, naturally-occurring crises may be something the company is going to have to get used to.

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