Question 3
Peter Long
Chief Executive TUI Travel PLC
- Introduction
- 1. What are the highlights of this year for you?
- 2. How are the different markets responding to the current economic climate?
- 3. What steps have you taken to further improve the Group's business performance?
- 4. How will your strategy and business model develop over the next couple of years?
- 5. How do you see the leisure travel market developing in the future?
- 6. What are the challenges TUI Travel is facing?
What steps have you taken to further improve the Group's business performance?
We have experienced both lower demand and significant cost inflation across the Group which we managed through our flexible business model. Carefully aligning capacity with demand allowed us to achieve our required load factors and also ensured that there was no excessive discounting in the lates market despite the later booking trend.
We have identified a number of businesses across the Group that were or are underperforming and we have taken or are taking appropriate steps to address these.
In Germany, we have concluded a transaction with Air Berlin who will take over our City Pairs business. This allows us to exit an operation which made significant losses in 2008. This deal makes strategic sense for both us and Air Berlin. We are also improving our product mix in Germany which will deliver higher margins and have plans in place to increase our controlled distribution.
In France, within Nouvelles Frontières, we are rationalising the product range to ensure that we operate programmes of significant scale to key destinations. Corsair, our long haul scheduled airline, was hit by a series of socio-political events in a number of its key destinations and we are continuing to review its business model and strategy. Our retail operation in both Nouvelles Frontières, where we were sub-scale, and Marmara, where we relied heavily on third party agents, needed to be addressed. We are now selling Marmara product through our Nouvelles Frontières and Havas retail operations and the transaction with Carlson Wagonlit Travel after the year end gives us the scale we require.
In Canada, which is an extremely competitive market with significant over-capacity, we have a weak market position and made a loss of £24m in 2009. Having reviewed the strategic alternatives for Canada, we recently announced a strategic venture with Sunwing, a leading tour operator in Canada. The transaction, once completed, will strengthen our position in the Canadian market and bring a number of strategic and financial benefits to the Group.