TUI Travel upbeat on profits before merger

British tourism group TUI Travel, which is merging with its largest shareholder TUI, said Thursday that annual profits were set to strengthen on keen demand in line with expectations.
TUI Travel said in a trading update that operating profit -- earnings before tax and interest payments -- was set to rise by at least nine percent in its financial year that runs to the end of September.
That tallied with the company's previous growth guidance of between seven and ten percent.
"We are very pleased with our trading during the summer 2014 peak season, particularly in the UK and Germany, with most of our programmes now almost fully sold," said chief executive Peter Long in the statement.
The group has sold most of its Summer holiday deals across mainstream markets, which comprise Britain, France, Germany and Nordic countries.
However, TUI Travel booked a provision of £27 million ($44 million, 35 million euros) in the fourth quarter against the loans made to its joint-venture in Russia and Ukraine, owing to the "ongoing challenging trading environment".
In addition, the firm also warned it expected a negative impact of £40 million on its full-year earnings due to the negative impact of foreign exchange movements, particularly the fall of the euro against the pound.
Britain's TUI Travel and Germany's TUI finalised terms in September to merge and create the world's biggest tourism operator.
The new company will have 74,000 employees and a combined stock market capitalisation of 6.5 billion euros ($8.3 billion).
Existing TUI Travel shareholders will own 46 percent of the new company, with the remainder controlled by TUI investors.