Tui finances hit by UK air traffic disruption

Tui almost broke even in the three months to June 30 despite incurring €75 million in mainly UK air traffic disruption costs.

Europe’s largest travel group handled 5.1 million holidaymakers in its third quarter with turnover up almost seven-fold to €4.43 billion over the same period last year.

A €27 million loss in underlying earnings included €75 million additional costs caused by “irregularities, particularly in British air traffic,” the company said.

Tui said 96% of all holidaymakers reached their destinations on time or with delays of less than three hours in May and June.

The roughly 200 flight cancellations in the period mainly related to departures from Manchester airport and represented less than one per cent of the entire summer programme.

“Excluding these additional costs, underlying group EBIT [earnings] would be €48 million, the first profitable quarter since the start of the pandemic,” Tui said.

Bookings for the summer peak months of July and August have returned to 93% of the pre-pandemic crisis levels. Tui has 11.5 million customers for summer 2022. As many as 3.9 million bookings have been added since May 11.

“The UK remains our most advanced market in terms of bookings with cumulative volumes remaining well ahead of summer 2019 at plus 5%,” Tui said.

UK bookings for winter 2022-23 have “started positively” with volumes up 16% compared to the same stage of winter 2018-19 with the programme around 27% sold.

The later booking profile experienced this summer is also expected to continue into the winter.

The company confirmed expectations of a return to “significantly positive” profit for the full financial year.

Holidaymakers continue to book more at short notice and at the same time spend more money on their trips.

Average prices are at a “very high” level for summer 2022, up 18% with holidaymakers booking more package holidays and higher value services such as room upgrades and longer stays.

The company said opportunities for further refinancing are to be exploited in order to further reduce Covid debt and German state participation.

Tui added: “The impact of the pandemic and the war in Ukraine on customer behaviour remains difficult to predict. The greatest area of uncertainty will be the impact on consumer confidence, should travel restrictions be reintroduced, should there be further cost inflation volatility and/or an escalation of the war in Ukraine.”

The company said: “In the medium term, the group expects a significant increase in underlying EBIT compared to the 2019 financial year results, driven by revenue growth and the benefits from the efficiency programme, which was launched during the pandemic.”

Chief executive-designate Sebastian Ebel said: “People want to travel. Holidays continue to top the list of planned spending – this has not changed.

“Although the entire European airline sector continues to face challenges, we have successfully ramped up our business with a significant increase in demand and achieved a good third quarter.

“This shows once again our integrated business model is robust. Tui is a strong brand, trusted by holidaymakers and our partners in the destinations.

“We are consistently tackling the operational challenges of the restart. We want to offer our guests the usual high Tui standards of quality and service.

“The topics of quality and customer experience are therefore at the top of my agenda. To this end, I will engage in intensive dialogues with the destinations, retail, but also with system partners such as airports and airlines.

“Tui’s travel summer will be strong, with capacity almost at pre-crisis levels in 2019. We expect a significantly positive underlying EBIT for the full year.”

Current chief executive Fritz Joussen announced in June that he will be stepping down on September 30 to be succeeded by chief financial officer Ebel.

Joussen said: “The figures after nine months confirm the trends and our expectations for 2022. We are experiencing a strong travel summer.

“Tui is secured and economically and operationally back on track when I hand over the chairmanship to Sebastian Ebel on 30 September.

“All growth areas expanded in recent years are back on track after corona: hotels, cruises and the tours & activities field with our digital subsidiary Tui Musement.

“Tui was strong and profitable before corona and will continue to be so after the crisis of the century.

“I would like to thank our customers for their trust during these difficult times and our employees for their enormous commitment.

“After two years of crisis management, they can now focus on growth again.

“Sebastian Ebel knows the company and the industry. With him, Tui is in the best hands when it comes to new growth and dealing with the aftermath of corona.”

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