TUI TRAVEL LTD LONDON (Reuters) - British travel group TUI Travel (>> TUI Travel PLC), weeks away from completing a merger with TUI AG (>> TUI AG), reported a forecast-beating 11 percent rise in underlying profits on Thursday .
The company and TUI AG, its biggest shareholder, reached an agreement in September on the terms of a 6.5 billion-euro (5.1 billion-pound) merger to create the world's largest leisure tourism group. The deal will complete on Dec. 17.
TUI Travel, whose many brands include Thomson and Airtours, said it was "pleased with current trading", with 63 percent of winter holidays sold, on average selling prices up 1 percent, and summer 2015 bookings for the core UK business 9 percent higher on average prices up 2 percent.
In contrast, rival Thomas Cook (>> Thomas Cook Group plc) warned last week that the trading environment was proving tough and it expected growth to moderate. It also replaced its chief executive.
Shares in TUI Travel were up 3.4 percent at 443 pence at 1027 GMT, just shy of the stock's all-time high of 450.9 pence reached in February. Shares in TUI AG were up 2.9 percent at 13.80 euros, a rise of 15 percent this year, compared with a rise of 4.9 percent in the main Frankfurt market index <.GDAXI>.
"In an environment of consumer caution and austerity, investors are also likely reacting to news that bookings for the winter 2014-15 season are already at 63 percent (of capacity) despite prices rising 1 percent while a strong start has been seen for summer 2015 bookings," Accendo Market's head of research Mike van Dulken said.
Underlying operating profit for the year ended September came in 11 percent higher at 654 million pounds on a constant currency basis, which the company said compared with a consensus forecast by analysts of 640 million pounds, driven by selling more of its higher-margin, exclusive holidays.
TUI had said in October that operating profit would rise by at least 9 percent, the upper end of its previous forecast for growth of between 7 percent and 10 percent.
However, TUI said its Russian joint venture weighed on results in 2014, blaming the weakness of the rouble and warning that it saw no let-up next year.
"Our view on the Russian market is, long term we see a big opportunity -- northern hemisphere, harsh winters and customers like to go on sun and beach holidays. So we will look to reduce our operating losses, but we still see a further tough situation in 2015," Chief Executive Peter Long told reporters on a results conference call.
(Editing by Karolin Schaps, Greg Mahlich)
By Sarah Young
