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TUI Travel earnings outlook leaves Thomas Cook in the shade

By Brenda Goh

LONDON (Reuters) - TUI Travel lifted its full-year profit forecast on Thursday and said demand for its winter holidays was strong, overshadowing British rival Thomas Cook whose shares tumbled after it reported slower summer trading.

TUI, the world's largest tour operator, increased its growth forecast for underlying operating profit to 11 percent from an estimate of 10 percent given seven weeks ago, while Thomas Cook said full-year profit would be in line with market expectations.

At 0909 GMT, shares in TUI were 1.8 percent higher at 363 pence, making it the second-highest climber on the FTSE 100 Index. Thomas Cook was down 11 percent at 145 pence.

"If you just read the tone of the statements, Thomas Cook's is a little more subdued than the TUI one," said Numis Securities analyst Wyn Ellis.

"Thomas Cook has come a long way and I think there's just a little too much expectation in the market. It wasn't a bad update by any means but there's a few headwinds going into the winter."

Thomas Cook shares are trading at an estimated price-to-forward earnings ratio of 29 times, compared to just 12 times for TUI, Thomson Reuters data showed.

Saved by an emergency bail-out from its lenders two years ago, Thomas Cook is halfway through a three-year turnaround plan that has seen it cut 2,500 jobs and close 195 underperforming outlets in Britain.

The 172-year-old company's share price has jumped more than 10-fold over the past year and last month reported its first third-quarter profit since staving off bankruptcy in 2011.

It said it experienced slower trading in summer compared to last year, as expected, after unusually bad weather in Europe in 2012 drove up late bookings, and that the winter season had started slower as well due to Europe's warm weather and unrest in places such as Egypt.

TUI, which owns the Thomson and First Choice brands, said it had seen a strong high-season summer with most of its programmes almost fully sold, delivering an 8 and 10 percent rise in revenue from Britain and the Nordic region respectively.

It said about 31 percent of its mainstream winter programme had so far been sold, with average selling prices across all its key markets, excluding Egypt, up year on year.

Both companies said they were confident of coping with the impact of recent unrest in Egypt, historically a popular destination with sunshine-seeking British, Russian and German holidaymakers during Europe's winter.

(Editing by Kate Holton and Tom Pfeiffer)