TUI Travel says demand for holidays remains strong

TUI Travel, Europe's biggest travel firm, saidtoday that demand for package holidays remains strong and it was confident of meeting its expectations for 2008 and 2009, despite slowing economies.

The group, created last year from the tie-up of TUI AG's travel division and Britain's First Choice, reported a 39 percent increase in third-quarter underlying operating profit to 65.4 million pounds ($124.5 million).

Revenue rose by 9 percent to 3.6 billion pounds and the underlying operating margin was up 40 percentage points to 1.8 percent.

TUI Travel said it has significantly fewer holidays left to sell for summer 2008 compared with last year. UK sales were up 5 percent with average selling prices 13 percent higher.

The group said winter 2008/9 and summer 2009 have started positively with average selling prices in the UK up 8 percent and 12 percent respectively.

TUI Travel said it has already completed the actions necessary to deliver the majority of next year's targeted merger savings of 80 million pounds and is confident of delivering at least 150 million of synergy benefits in total.

The group and its rival, Thomas Cook, have been cutting capacity, leaving them with fewer holidays to sell and enabling them to avoid deep discounting on late bookings.

TUI Travel said it will make further reductions to capacity in summer 2009, particularly in the UK and Germany, with year-on-year capacity reductions of 15 percent and 6 percent.

The average forecasts for 2008 and 2009 pretax profit are 317 million pounds and 403 million pounds respectively, according to Reuters Estimates.