Holiday giant cuts 800 UK jobs

TUI AG, Europe's largest holiday company, is cutting 800 jobs from its UK workforce by the end of this year. The jobs will go from High Street travel agents Lunn Poly and Thomson Travel, and short-haul airline Britannia.

Peter Rodwell, TUI's head of Northern European operations, said the company is taking the step in an attempt to keep up with changes in the way that their customers buy holidays. 'More efficient structures are required,' he said.

Rodwell has ordered the shake-up only weeks after the surprise resignation of the head of TUI UK, Chris Mottershead. TUI's margins in European travel are under pressure, particularly on the flights side. Over 50 no-frills airlines have sprung up in the last few years competing for market share on prices alone.

Industry observers point out that few companies can sustain such low airfares in the longer term, and that the weaker players will inevitably go out of business. An ensuing recovery in airfares could benefit the bigger players like TUI.

However, lower airfares have prompted travellers to move away from package deals and to rely less on tour reps to organise their holiday activities. This trend is unlikely to reverse and TUI, which currently owns 84 tour operators across Europe, is vulnerable to it.

August figures from TUI showed that, despite competition from First Choice, MyTravel and Thomas Cook in the UK, first-half revenues from tourism in Northern Europe rose by 13% compared to the year before.

TUI is forecasting their whole tourism division's full year earnings before tax to increase by at least 70% compared with the year before.