Switzerland's largest tour operator, Kuoni Travel, reported on Tuesday that it was facing a "tough" time ahead, despite good third-quarter results.
Kuoni said that for the year as a whole, it expected to record annual sales revenues slightly below last year's figures, with profit expected to amount to around SFr10 million ($6.09 million).
Last year, Kuoni had sales of SFr4.113 billion and made a profit of SFr115.1.
Commenting on its third quarter figures, Kuoni said that it had made up substantial ground in operating terms following a "disappointing" first half performance.
The Zurich-based travel group generated sales revenues of SFr1.316 billion from July to September, an increase of 0.7 per cent recorded for the same period last year.
However, the group said its business environment had "deteriorated dramatically" since mid September.
A statement said the demand for vacations to key destinations and for incoming services had seen a substantial slump, and the company was also feeling the loss of airline commissions in the business travel sector.
In view of this, Kuoni said it expected to post a decline in sales for the fourth quarter, a period which normally makes a substantial contribution (SFr38.4 million in 2000) to EBITA (Earnings Before Interest, Tax and Amortisation), and a negative operating result.
The statement said that despite the "excellent" results achieved for the third quarter, the Kuoni group expected results for the fourth quarter and for the year as a whole to be substantially below its mid-year predictions, as a result of the developments since the terror attacks in the United States on September 11.
US travel halts
US travel halts
Kuoni confirmed that demand was down throughout the industry. Several key business areas for the group - vacations to the United Arab Emirates, Egypt and overseas destinations, as well as incoming services had been hit "particularly hard", the statement said. Travel from the US had virtually dried up.
The company, which confirmed on Sunday that it was cutting 500 jobs worldwide, has introduced a strict cost management programme. This includes a temporary freeze on all recruitment, advertising and investment.
The Kuoni statement said that in view of the current political and economic uncertainties, it was not possible to make any reliable predictions of business trends.
However, it added that the group assumed that customers would rediscover their desire to travel once the current global uncertainties had been allayed.
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