Egypt, Tunisia tourism recovery seen lengthy
London, September 22, 2011
TUI Travel, Europe's biggest tour operator, is on track to meet full-year profit expectations due to strong late summer bookings although it has yet to see a revival in demand for holidays in Egypt and Tunisia, its CEO said.
"We are anticipating a slow recovery in trading to Egypt and Tunisia and have managed our capacity accordingly," chief executive Peter Long said in a statement on Thursday.
TUI said political unrest in Mena was still putting customers off vacationing in the region.
The group, which operates the Thomson and First Choice chains, cut the amount of holidays it sold to Egypt and Tunisia this summer and increased holidays on sale to alternative destinations such as Spain, Greece and Turkey.
Numis analyst Wyn Ellis downgraded the stock to "hold" from "add" and cut his price target to 160 pence from 180p, flagging concerns over rising fuel prices, Mena unrest and macro-economic concerns.
"Today's pre-close update from TUI was reassuring with regards to short term trading, but we continue to believe that 2012 estimates look vulnerable," Ellis said.
TUI Travel, majority owned by Germany's TUI AG, said in May that troubles in Egypt and Tunisia had knocked 29 million pounds ($45 million) off its first half profit but expected to fully mitigate the impact in the second half.
The group said it was confident its full year results would be in line with expectations following strong late demand for summer holidays. It said the summer season had traded well with bookings up across most of its markets while margins for late bookings had been in line with its expectations.
"We are pleased with our performance in the lates market for summer 2011 and most of our programmes are now almost fully sold. We remain confident that the full year results will be in line with our expectations," Long said.
The group added that trading for winter 2011/12 had been satisfactory overall.
Shares in TUI Travel, which have lost nearly half their value since January on concerns over the consumer environment, were down 4.3 per cent to 148.3 pence at 1037 GMT. – Reuters