TUI lifted by a rush to the sun next summer

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Holidays giant TUI Travel has reported a surge in bookings for next year as families look to avoid another miserable British summer.

The Thomson and First Choice operator said UK bookings for next summer were already up 10 per cent against the same period last year.

And the European travel giant’s programme for this summer is now almost fully sold after an improvement in UK booking trends over the last two months.

Sales in its key UK market were up 5 per cent for this summer as a whole after a 10 per cent rise in average selling prices offset a 6 per cent reduction in its capacity.

There was an improved trend in overall summer bookings from the UK, down 2 per cent in August and September against the 5 per cent decline in the rate seen at the end of July.

As well as the poor weather, a weakened euro has proved attractive for many Britons opting for short-haul destinations such as Majorca, Ibiza and Menorca.

However, the weaker euro is a double-edged sword for TUI as the exchange rate is also impacting profits from its northern and central European markets.

TUI added that bookings for this winter have been encouraging and that UK bookings for next summer are up 10 per cent, with a slight increase in capacity.

It said of next year: “We are significantly outperforming the market and average selling prices are up by 3 per cent.”

Chief executive Peter Long said: “We remain on track to meet our full year expectations, with strong underlying trading offset by the impact of re-translation of fourth quarter eurozone earnings.

“Our continued outperformance in a challenging macroeconomic environment demonstrates our robust strategy is delivering clear results.”

TUI Travel is expected to report an average pre-tax profit of £356.3m for the year to the end of September, according to a Thomson Reuters poll of 16 analysts.

The FTSE 100 company said although it was relatively early in the booking cycle, winter 2012/13 sales had been encouraging since August with load factors in line with its expectations.

Winter holiday sales had been especially strong in northern and central Europe, it said.

Numis analyst Wyn Ellis said in a note: “TUI is confident that the period of heavy restructuring is now over and that the margin outlook is improving, especially in the UK.

“These two factors will, we believe, lead to better quality earnings growth and stronger cashflow, underpinning solid dividend growth.”