Tui Travel's CFO to step down after IT blunder
Tui Travel's chief financial officer is to step down after an IT blunder forced the group to restate its 2009 results to the tune of £117m.
The newly-discovered error quadruples estimates made in August by Europe's largest travel firm that it would only need to write off £29m in receivable balances for its UK tour operator business in the third fiscal quarter.
But following an ongoing audit, the German company has now discovered that a further £88m in irrecoverable balances will also have to be written off. This means that it will have to restate last year's financial results because underlying operating profit in the year to September 2009 was £401m, £42m lower than previously reported.
The company blamed the situation on its use of two separate computer systems following the merger of Tui AG's tourism business with the UK's First Choice in 2007. One system was used by its retail division to make customer bookings, while the other was employed by tour operators working for it.
Although initial customer bookings were registered on both systems, any subsequent changes to customers' holidays such as discounts or other small item fees were only recorded in the retail booking system, leading to discrepancies.
The scenario resulted in Paul Bowtell, Tui Travel's chief financial officer, tendering his resignation, although it is currently unclear whether he will receive a pay-off as "any terms are still under discussion", the firm said. Bowtell was previously finance director of First Choice and prior to that of British Gas and WH Smith.
Peter Long, Tui's chief executive, said: "It is now clear that at the time of the merger, there were weaknesses in the legacy systems we chose to use in the Tui UK business. Despite the fact that this situation had built up over a number of years, Paul is behaving honourably and I am disappointed that he will be leaving the group."
Bowtell was one of the “most capable” chief financial officers he knew and they had had an "extremely good" working relationship over the last six years, Long added.
The company estimates that the discrepancies have existed for up to five years but were previously too small to have been noticed. It was only during the 2009 holiday season when travel operators were forced to introduce heavy promotions during the recession that the discounts became large enough to be noticed.
Tui UK is now under a new leadership team. Johan Lundgren has become managing director for the northern region and Colin McKinlay joined on 1 October as finance director from Homeserve.