Press Association
Sunday 14th March 2010
Tour operators Thomas Cook and Thomson parent TUI Travel report full year figures on Monday and Tuesday amid growing concerns over the outlook for holiday firms.
The two groups have come under pressure on the London market in recent days after gloomy comments from analysts.
A research note from Morgan Stanley said that "demand is still weak, cost pressures remain and capacity is getting harder to cut".
Shares in the two companies dropped 4% on the day of the downbeat assessment, as the broker also expressed concerns over rising debt levels.
Morgan Stanley added that they faced other headwinds, such as higher fuel costs as well as low-cost carriers seeking to grab more of a share of medium-haul routes and UK holidaymakers putting off travelling by the weak pound. Comments from the two groups will be eyed closely for their views on the year ahead.
The recession has already impacted demand for foreign holidays, although the firms have limited the financial hit by cutting routes and capacity.
TUI, which also owns First Choice, said in September that winter sales were down 13% as the trend for customers to book trips nearer the time of departure continued.
However, it added that the decline in its UK market was in line with expectations and that capacity reductions meant it had 12% fewer holidays left to sell.
Thomas Cook has seen similar trading conditions, with late bookings becoming more commonplace and less holidays left over, which has been helping it avoid heavy discounting.
Analysts in the City predict the company will report adjusted full-year profits of £299 million, down marginally on the £309.3 million result the previous year. Morgan Stanley is expecting Crawley-based TUI to deliver underlying profits of £360 million, up from £320 million.
