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ATC strikes and competition hit TUI quarterly profit

TUI has highlighted the cost of disruption to its airline operations from air traffic control strikes this summer as well as greater competition on routes to Spain, after operating profit dipped 7.5% to €293 million ($340 million) in its third quarter ended 30 June.

Revenue rose 5% to exceed €5 billion.

The European tour operator says airline disruption cost it €13 million, primarily as a result of French ATC strikes, and that it is conducting a "detailed operational review" of its resilience to such action.

It describes the French market as being "very challenging", with "very strong" price competition, particularly on Spanish flights, "which has benefited our non-integrated competitors".

Within its central region, which includes Germany, TUI has been seeing increased demand for travel to Turkey, North Africa and Greece. but this is partly offset by lower bookings for some the group's "specialist brands". Margins have also been hit by an increase in capacity on leisure routes following Air Berlin's bankruptcy, especially to Spain.

In an interview with FlightGlobal last month, TUI's airlines chief Daid Burling said it had been able to "capitalise" on Air Berlin's collapse to increase its slot portfolio across the country, especially at Dusseldorf, where the group has based six aircraft.

TUI today says that, overall, a rise in early bookings has helped it offset some of the negative impact of "prolonged good weather".

Demand in the UK remains "resilient", but trading margins have been impacted by sterling's weakness.

TUI has hedged 93% of its fuel for summer 2018, 86% for the winter and 72% for summer 2019.

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