Western Europe
Western Europe comprises the market-leading tour operating and distribution businesses in France, Belgium and the Netherlands as well as the following airlines: Corsairfly (France), Jetairfly (Belgium), Arkefly (Netherlands) and Jet4you.com (Morocco). In France, it includes the two largest tour operators: Nouvelles Frontières and Marmara. In Belgium, it comprises Jetair, which is the largest holiday brand in Belgium, and Sunjets, while in the Netherlands it comprises TUI Nederland, with the brands Holland International and Arke, the latter being the only vertically integrated tour operator for the Dutch source market.
Western Europe reported underlying operating profits of £33m in 2009 (2008: £37m). In France, our airline Corsairfly was significantly impacted by the socio-political issues in the French West Indies and Madagascar in the second quarter. This was offset by a very strong performance from Belgium due to robust Summer 2009 trading and reduced fuel costs.
£m | France | Netherlands | Belgium | Western Europe |
|---|---|---|---|---|
| 2008 | 5 | 8 | 24 | 37 |
| FWI/Madagascar | (15) | – | – | (15) |
| Trading | (12) | (1) | 21 | 8 |
| Acquisitions | (1) | (1) | ||
| Synergies | 4 | – | – | 4 |
| 2009 | (19) | 7 | 45 | 33 |
| Western Europe | 2009 | 2008 | Change % |
|---|---|---|---|
| Customers (’000) | |||
| France | 2,217 | 2,451 | 10% |
| Netherlands | 1,274 | 1,430 | 11% |
| Belgium | 1,790 | 1,864 | 4% |
| Total | 5,281 | 5,745 | 8% |
| Revenue (£m) | |||
| France | 1,228 | 1,307 | -6% |
| Netherlands | 700 | 686 | +2% |
| Belgium | 724 | 759 | -5% |
| Total | 2,652 | 2,752 | -4% |
| Underlying operating profit/(loss) (£m) | |||
| France | (19) | 5 | n/a |
| Netherlands | 7 | 8 | -13% |
| Belgium | 45 | 24 | +88% |
| Total | 33 | 37 | -11% |
| Underlying operating margin (%) | |||
| France | (1.5)% | 0.4% | -190bps |
| Netherlands | 1.0% | 1.2% | -20bps |
| Belgium | 6.2% | 3.2% | +300bps |
| Total | 1.2% | 1.4% | -20bps |
France
| £m | Nouvelles Frontières | Corsair | Marmara | France |
|---|---|---|---|---|
| 2008 | (22) | 10 | 17 | 5 |
| FWI/Madagascar | – | (15) | – | (15) |
| Trading | 8 | (19) | (1) | (12) |
| Acquisitions | (1) | – | – | (1) |
| Synergies | 2 | – | 2 | 4 |
| 2009 | (13) | (24) | 18 | (19) |
France reported an underlying operating loss of £19m in 2009 (2008: profit of £5m). Corsairfly, our French long haul scheduled airline, was significantly impacted by a series of socio-political events in the key destinations of French West Indies and Madagascar during the second quarter. Consumer sentiment towards these destinations continued to be weak for the remainder of 2009 and passenger numbers to these destinations decreased by 15% versus the prior year. As a result, Corsairfly incurred repatriation costs, cancellations and weaker demand for these destinations, which led to a £15m impact on operating profits.
The airline also experienced softer consumer demand following the economic downturn. As a result of the softer demand, the average selling prices achieved were not sufficient to recover input costs.
Controlled distribution improved by four percentage points in 2009 to 50%, driven by a redesign of our French websites and a series of marketing actions to strengthen brand awareness.
France delivered synergies of £5m, an increase of £4m over the prior year synergies of £1m. These synergies were primarily generated by distributing Marmara products through the Nouvelles Frontières retail network and savings on seat rates for shared routes. In addition, Marmara launched four new long haul destinations – Mauritius, Dominican Republic, Kenya and Canada – using Nouvelles Frontières’ in-house flight capacity, which enabled Marmara to offer these destinations at attractive prices for the French customer.
We are focused on strategic solutions for all aspects of the Nouvelles Frontières and Corsairfly businesses, including:
- Continuing to review the business model and strategy for the Corsairfly business;
- Addressing our product strategy, including revitalisation of our differentiated product offering and rationalisation of the product range to exit from unprofitable destinations; and
- Expanding distribution capability, including an agreement with Carlson Wagonlit.
Netherlands
Netherlands reported an underlying operating profit of £7m in 2009 (2008: £8m). Summer 2009 margins were slightly behind the prior year, as average selling prices were under pressure in the lates market due to the softer consumer demand and the later booking profile. Total capacity for 2009 was reduced by 12% compared to the prior year, particularly to the destinations of Spain (down 15%) and Turkey (down 10%), with customer volumes down 11%.
Belgium
Belgium achieved a strong improvement in underlying operating profits to £45m (2008: £24m). This was driven by careful capacity management, which resulted in higher occupancies and strong pricing in the Summer 2009 lates market, combined with innovative up-selling, cost efficiencies and a significant reduction in fuel costs. During 2009, the business successfully launched a new web-based reservation platform, which improved operational efficiency and web capability.
