THE owner of travel brands Thomson Holidays and First Choice delivered a record full year performance yesterday less than two weeks after a major rival's share price plummeted amid fears of an imminent collapse.
Britain's biggest holiday firm TUI Travel saw a 15per cent increase in underlying operating profits in the UK to £147m and an 18per cent rise in group profits to £471m in the year to September 30.
The robust performance comes after rival Thomas Cook spooked holidaymakers and investors when it turned to its banks for extra support in the wake of deteriorating sales.
The company, which saw its share price slump by 75 per cent in one day amid fears of an imminent collapse, last week published a letter from interim chief executive Sam Weihagen in national newspapers saying it is safe to book breaks with the group.
During the turmoil TUI Travel ran full-page adverts for its Thomson brand which said: "Another holiday company may be experiencing turbulence, but we are in really great shape." and "Unlike a certain holiday company we could mention, you don't need to worry about the way we run our business.''
The adverts sparked criticism because they drew consumers' attention to Thomas Cook's financial problems.
Peter Long, TUI chief executive, said the adverts were designed to ''clarify'' the difference between the two companies and said it was hard to determine what effect the issues at Thomas Cook were having on TUI's business.
He added that sales had improved in the last two weeks but this could not be solely attributed to the problems at Thomas Cook.
Yesterday TUI said sales of differentiated products - concept holidays unique to TUI brands - such as water park SplashWorld, Holiday Village resorts and child-free Couples holidays, grew 14per cent in the UK in the year to September 30.
However it warned winter bookings in the UK had slowed down in the face of weak consumer sentiment.
It reported a 12per cent year-on-year drop in winter 2011/12 bookings as at November 27.
TUI said it was experiencing a later booking profile, reflecting the continuing issues in North Africa and the consumer spending squeeze, driven by higher prices and muted wage growth.
TUI said capacity in the UK had reduced as it moved aircraft within the group to serve higher demand in its markets in Canada and Scandinavia.
The group, which serves around 30 million customers and operates in 180 countries, said average selling prices are up 5per cent.
Mr Long added: ''We are very pleased with our robust performance in 2011 and have delivered another year of profit growth, against a backdrop of unrest in key North African destinations and weak consumer sentiment in some source markets.''
Looking ahead, TUI said it was early in the booking cycle for summer 2012 as most of its markets launch their main edition brochures in December.
But so far it has sold 19per cent of the season's programme, with bookings 11per cent lower than the year before, partly reflecting the reduction in capacity, while average selling prices are up 9per cent.
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