The operator blamed the increase on several factors: the devaluation of sterling, the timing of Easter – which this year fell in its second half – weaker trading in Canada, France and the Nordics and losses in its German and UK scheduled flying operations.
However, TUI said it is seeing a continued increase in demand for holidays and it is ‘well positioned’ to meet full-year expectations on 30 September.
In a statement to announce its preliminary half-year results to 30 March, TUI said: ‘We are encouraged that the improvements in demand experienced in February and March trading have continued into April and May, despite the ongoing economic weakness.
‘We continue to expect a flatter booking profile in the current market, however, the strength of the lates market in winter 2008/09, where we achieved strong pricing and target load factors, combined with having significantly less product left to sell, gives us reason to be confident.
‘For the next financial year, we are leveraging our scale position to maximise cost opportunities in the supply chain through reduced hotel rates while continuing to assess our capacity plans.’
The UK reported an underlying operating loss of £120m, an improvement of £24m over H108’s £144m loss.
This was due to the delivery of synergies and margin improvement from capacity rationalisation, offset by the inclusion of 100% of the winter losses of Island Cruises and the timing of Easter holidays. Bedbank LateRooms.com increased profits by £1m.
Synergies of £37m were delivered in H109, an increase of £33m over prior year. The business remains on track to deliver full year synergies of £90m. Elsewhere in the group, £15m of synergies were realised.
TUI Travel chief executive Peter Long said: ‘TUI Travel has delivered a first half performance in line with our expectations, having managed certain source market and destination specific issues, while continuing to deliver our key strategic goals and synergy targets.
‘In addition, during the first half we agreed the joint venture in Russia and Ukraine and the strategic co-operation between TUIfly and Air Berlin.
‘Despite the ongoing economic weakness, we are encouraged by current trading patterns and consumer sentiment across the breadth of the group.
‘This confidence, coupled with our strong brands, market leading positions and our flexible business model means we remain well positioned to meet our expectations for the year to 30 September 2009.’
Meanwhile, TUI UK has publicly backed Advantage chief executive John McEwan to become ABTA's next president.
In a statement Tim Williamson, customer director at TUI UK, commented: 'ABTA and the industry as a whole are facing some challenging times and need a leader who can make some tough decisions, but also the right ones.
'It is my belief that John's range of experience, from tour operator to travel agent and business to leisure travel, will allow him to understand the sometimes varied views held and act in the best interests of the whole industry.
'We need a collaborative approach, with all parties working together and John is well positioned to make that happen.'
Click here to see the first half results in full (273KB pdf).
See also:
Go ahead for TUI's Russia JV (15/04/2009)
Air Berlin seals TUIfly and Pegasus deals (30/03/2009)
TUI Travel cuts operating loss (25/03/2009)