Bullish TUI cranks up forecasts

A rush of late winter bookings, cost-cutting and an early Easter, slashed half-year losses from £317m to £289m - way ahead of consensus forecasts. Strip out the cost of returning empty planes at the end of the season and that drops to £274m. Profit margins and prices improved sharply, too, driven by the UK and Nordic region. Over here, losses at the mainstream division shrunk by £12m, or by £22m to £103m including empty legs. In the Nordics, profit actually grew by almost three-quarters to £38m, although flooding in Bangkok did rather ruin business there last year. Belgium and Canada also did well, helping offset further weakness in France where Tui took out a third of lossmaking capacity during the period. Still, cutting costs saved £10m, trimming losses to £51m, and management thinks France will break even next year. Job cuts elsewhere saved a further £7m, leaving another £48m to come by the end of next year.

Momentum has spilled over into the summer season as well, as Brits take no chances with the summer weather. Bookings rose 7 per cent and, with prices also up, UK summer sales have risen 13 per cent. All-inclusive deals are "very popular" says chief executive Peter Long. The Nordics have done even better and pricing has been strong in Germany, which compensates for predictable weakness in France where Tui is dumping unprofitable, mostly long haul destinations. Overall, 58 per cent of its mainstream summer holidays are already sold.

Analysts at Barclays expect full-year adjusted pre-tax profit of £434m, giving adjusted EPS of 29p (from £390m and 26p in 2012).