May 16 - TUI AG reports a smaller than expected loss and says it wants to expand its hotel and cruise operations. Are the fortunes of the travel sector - and of the spending power of the European consumer - on the up? Hayley Platt reports.
Better than hoped for results and plans to expand. That's the outlook from German travel group TUI. Although it made a 205 million euro loss in the second quarter, it wasn't quite as bad as expected. IG's Alistair McCaig says a mild winter in Europe may have helped. SOUNDBITE: Alistair McCaig, market analyst, saying (English): "We've seen this in all the tour operators and a number of airlines stating that costs have been helped with ongoing costs lower due to lesser fuel usage and needs and also disruption costs being lower as well so that's certainly going to have contributed to moving TUI and the travel industry as a whole back on track." TUI's results comes days after rival travel firm, Thomas Cook also posted narrower first-half losses. Both companies have been restructuring their business in an attempt to return to profit. Thomas Cook is half-way through a three-year turnaround strategy, cutting jobs and closing branches. The euro zone debt crisis and political turmoil in countries like Egypt and Tunisia haven't helped. But TUI says its on track to meet its target of a 1 billion euro profit over the next two years. Signs of consumer confidence returning giving a helping hand. SOUNDBITE: Alistair McCaig, market analyst, saying (English): "There does seem to be a bit more sentiment as well, as far as Europe is concerned as to spending money on holidays again. It just feels like a little bit more money in the pocket then there had been in previous years." TUI is eyeing the cruise market - which is predicted to grow between 8 and 10 percent over the next 4 years. It already operates cruises under the Thomson brand and is also considering expanding its TUI Cruises brand into Britain.