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Egypt Holidays > Travel News > Big two UK holiday groups look set to dominate
Big two UK holiday groups look set to dominate | | 1st October 2008 |
The two big UK tour operators will gain as the others face greater pressure and do-it-yourself holidaymakers return to package deals, according to Peter Long, Tui Travel's chief executive.
After Tui and Thomas Cook produced bullish, uncannily similar pre-close trading updates, the fallout from the demise of XL, the smaller rival, this month became clearer, with the big two likely to push up prices and cut capacity further.
Including the past seven weeks of trading, Tui's UK summer 2008 programme is 94 per cent sold, 3 per cent ahead of the previous year, and underlying prices are 6 per cent ahead on a 13 per cent reduction in capacity.
Thomas Cook has also sold 94 per cent of its summer holidays, at prices 7 per cent above last year and a capacity cut of 10 per cent.
Both have sold about a third of their winter programmes and 12-15 per cent of summer 2009, in line with expectations.
“We have enjoyed a surge of bookings since the unfortunate collapse of XL and that will continue,” Mr Long said. Any softness in demand could be offset by reducing capacity possibly by 15 per cent next summer.
“One of the key changes is the strong will get stronger and the weak will marginalise,” he said. “We are going to see a number of customers who traditionally book and make their own arrangements going back to tour operators.”
While Tui's share price slid 3.9 per cent, Thomas Cook's was unchanged after worries about a stock overhang eased.
Thomas Cook also called off a three-way German budget airlines merger between its Condor division, Tui's Tuifly Germany and Lufthansa's Germanwings, saying the opportunity was “not attractive” and expressing renewed confidence at Condor's ability to continue as a standalone business.
Manny Fontenla-Novoa, Thomas Cook's chief executive, said: “We were scared 18 months ago when we saw airlines increasing the size of their fleets. But the whole world has changed and the bottom has fallen out of this market. We feel more comfortable to compete in this environment.
Thomas Cook also announced it had purchased £249.5m of its planned £290m share buy-back programme and said synergies from last year's merger of Thomas Cook and MyTravel would be above £155m by 2008-09. |
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