Finance boss quits Tui Travel over £117m ‘black hole’

The holiday operator best known for the Thomson brand was forced to restate its financial results for errors that go back several years.

Paul Bowtell, second in command to effervescent chief executive Peter Long, has offered his resignation and will leave by the end of the year.

TUI says the write-offs are the result of "failures to reconcile balances adequately in legacy systems".

After the merger with First Choice in 2007, the company used two separate computer systems, one to make bookings for customers, the other to process data from tour operators. Discrepancies arose when discounts offered to customers were not recorded on the tour operator system.

The shares slumped 16.7p, more than 7%, to 213.7p.
Bowtell was paid more than £1 million last year, including a £547,000 bonus. Asked if this still seemed appropriate, the company declined to comment.

Bowtell was also paid £123,000 in pension contributions in 2009 alone. He owns nearly 425,000 shares.

Long, an industry veteran with decades of experience, says the computers were in error.
He 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."

The company would not say if Bowtell will receive a pay-off, which probably means that he will get at least a year's salary. A spokeswoman said the decision to quit was Bowtell's alone.

Defending his colleague, Long said: "He is one of the most capable chief financial officers I know, and we have had an extremely good working relationship over the six years that we have been a team. I have specifically asked Paul to remain with the business to see through the full-year audit and production of our preliminary results. I will miss working with him and wish him every success for the future."
The adjustments to the balance sheet mean that profit for 2009 will be £42m lower at £401m.
Mark Brumby of Langton Capital said in a note: "The fact that these are legacy issues is reassuring in one way but worrying in that the unreconciled balances must have existed over several financial periods and had not been spotted."
The group also disclosed the latest trading statistics, which show a slowdown in the rate of booking volumes growth in the past three weeks.
Panmure Gordon downgraded its recommendation on the shares from Hold to Sell.