TUI Scores Big in First Quarter of 2004, Plans to Double Benefits by 2008

TUI continues its upward trend at the beginning of the 2005 financial year. In the first quarter of 2005, the Group increased both turnover and earnings by divisions. And now the Germany-based group –Europe’s largest tour operator- is licking its chops to double revenues by 2008.

In the first three months of 2005, TUI’s continuing operations reached 261 million euros, an increase of 13 percent. Tourism recorded 6.3 per cent growth, reporting an improvement in earnings by this sector year-on-year. In the first quarter, TUI also reported an increase in turnover by continuing operations. At 3.23 billion euros, it rose by eight per cent year-on-year.

Earnings of the discontinuing operations, trading and special logistics, to be divested before the end of 2005, halved in the first quarter of 2005 to 26 million euros. This dip was due to divestments in the special logistics sector in 2004 and earnings in the trading sector, which failed to match expectations. Turnover also declined to 353 million euros (2004: 526 million euros) as of the end of the first quarter of 2005.

In the first quarter of 2005, the positive trend of 2004 continued in the tourism division. Earnings by the division increased by more than six per cent to minus 192 million euros. Turnover rose by just under seven per cent to 2.5 billion euros. A total of 3.78 million customers traveled with Group companies.

The strongest growth within the tourism division was achieved by the Central Europe sector (Germany, Austria, Switzerland and the airlines Hapag-Lloyd Flug and Hapag- Lloyd Express). Earnings by the sector rose by almost 15 per cent from minus 101 million euros to minus 86 million euros. At 940 million euros (2004: 841 million euros), turnover grew by just under twelve per cent year-on-year. This growth was in particular attributable to business in Germany.

Another sector reporting an increase in turnover was Northern Europe (UK, Ireland, Nordic countries and the airlines Britannia Airways UK and Nordic as well as Thomsonfly). Turnover grew by 5.5 per cent to 895 million euros (2004: 848 million euros). In contrast, earnings declined to minus 106 million euros (2004: - 98 million euros) in the first quarter.

This decline was attributable to the first-time inclusion of low-cost carrier Thomsonfly, previously carried under central operations. Thomsonfly did not launch its operations until the second quarter of 2004 and reported negative earnings for the first quarter of 2005 for seasonal reasons and due to the start-up costs of the flight operations at the new departure airports Bournemouth and Doncaster.

Earnings in the UK (excluding Thomsonfly) and the Nordic countries, on the other hand, showed a positive trend, exceeding last year’s levels.

In the Western Europe sector (France, Netherlands, Belgium, and the airlines Corsair and TUI Airlines Belgium), TUI posted a turnover growth of 4.7 per cent to 531 million euros (2004: 507 million euros), primarily thanks to the source markets France and Belgium.

However, at minus 19 million euros, earnings in the first quarter dropped below last year’s level of 11 million euros. On the one hand, declines in France were not fully offset by improvements in the Netherlands. On the other hand, earnings in Belgium fell short of 2004 levels due to the negative seasonal performance in flight operations, only launched in the second quarter of 2004.

Destinations, the fourth sector of the tourism division, posted a turnover of 89 million euros for the first three months, dipping by slightly more than ten per cent against the 2004 level of 99 million euros.

The decline was mainly due the divestment of the Anfi Group in June 2004. In contrast, the sector reported brisk growth in earnings, which rose from eight million euros in 2004 to 23 million euros. One of the reasons for this positive trend was the increase in operating results in hotel companies.