TUI Travel reports improved winter bookings; Lufthansa upgraded by another analyst; Finnair down


TUI Travel (+7.3%) shares rocketed higher on Thursday (02-Dec-2010), leading the rise in European airline shares for the day. The company was up after reporting a 4.0% year-on-year improvement in profit before tax to GBP337 million, for the 12 months ended 30-Sep-2010. However, it reported a net loss of GBP104 million for the period, compared with a restated loss of GBP66 million in the previous corresponding period.

  • TUI Travel reports a 4.0% YoY improvement in profit before tax, despite a net loss for the period.
  • TUI Travel's operating profit increases by 11% despite a decline in revenue.
  • Winter bookings show positive growth in Nordic countries, the UK, and Germany for TUI Travel.
  • Lufthansa's shares rise as Citigroup raises its price target, citing improving traffic and revenue conditions.
  • Finnair experiences a decline in share price due to ongoing cabin crew strike action.
  • Finnair expects to operate 40% of regular passenger traffic as some cabin crew return to work.

Operating profit was also up for the year, rising 11% to GBP447 million, despite a 2% decline in revenue to GBP13,525 million. Underlying operating profit and underlying profit before tax are from continuing operations and exclude separately disclosed items, amortisation of acquisition-related expenses, goodwill impairment and taxation of results of the group's joint ventures and associates. Underlying profit before tax also excludes separately disclosed financial expenses. TUI attributed the losses to a weaker operating environment in the UK.

Shares also rose after the company reported a 27% year-on-year increase in winter bookings from 21-Oct-2010 to early Dec-2010 in Nordic countries, a 2% rise in the UK and a 9% rise in Germany.

In its outlook for 2011, TUI Travel stated it remains cautious "given the economic uncertainty and the continued economic uncertainty and the relatively early stage of the booking cycle". CEO Peter Long stated the company has a "number of remaining initiatives to drive further profit improvements", including the turnaround of Corsair.

See related CAPA Profile: Outlook, Forecasts, Guidance

Lufthansa upgraded by another analyst

Lufthansa (+3.1%) also gained for another day after Citigroup raised its price target for the carrier's shares from EUR19 to EUR25.50. It maintained a "buy" rating for the carrier. Citigroup attributed the raise to "improving traffic and revenue conditions" and "enhanced dividend prospects".

Cimber Sterling (+5.5%) and British Airways (+5.2%) also ended the day higher.

Finnair cabin crew strike continues

Finnair (-0.8%) was one of the few carriers to decline for the day as cabin crew strike action continued. The carrier stated it now expects to operate 40% of regular passenger traffic in coming days as some cabin crew have returned to work.

Finnair operated approximately 30% of its flight schedule, and plans to increase it to 35% on 03-Dec-2010. The dispute, with members of the cabin crew union SLSY, is over the airline's plan to cut rest time between long-haul services from 36 hours to 24 hours. The union began a strike over a wage deal on 30-Dec-2010, forcing the carrier to cancel more than 500 flights so far.

Norwegian (-2.9%) and Aegean Airlines (-0.9%) were also down for the session.

Europe selected airlines daily share price movements (% change): 02-Dec-2010

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