Tui cuts losses as eased travel restrictions revive tourism, but airport chaos delays group profitability
- The German leisure group revealed a loss of €331.2 million in the second quarter
- A total of 5.3 million people left with Tui between April and the end of June
- Flight disruption prevented company from posting underlying profit
Tour operator Tui Group managed to cut its losses by two-thirds following a resurgence in outbound travel.
The London-listed German leisure company revealed a loss of 331.2 million euros in the second quarter, compared to a loss of 939.8 million euros in the same period last year, when the strict restrictions of Covid -19 undermined demand for vacations abroad.
A total of 5.3 million people left with the company between April and the end of June, a more than five-fold increase, with solid growth reported across all divisions and territories.
Recovery: Tui recorded a loss of 331.2 million euros in the second quarter, compared to 939.8 million euros in the same period last year when the strict restrictions of Covid-19 undermined demand for holidays in abroad
Demand for cruise travel has benefited from Tui’s three maritime brands – Hapag-Lloyd, Marella and Mein Schiff – operating full fleets after their ships were kept at berth or within strict occupancy limits last year.
Revenue for the northern Tui region, which covers the Nordics and countries like the UK and Germany, has soared from just €56 million in 2021 to €1.76 billion this time.
Customer volumes reached 84% of 2019 levels, but the company was unable to generate an underlying profit due to flight disruptions which cost it an additional 75 million euros in the quarter. .
This has resulted from an intense resumption of overseas travel, combined with shortages of ground handling and security staff at airports, leading to numerous aircraft delays and cancellations.
The Platinum Jubilee holiday weekend and the Easter holidays saw particularly significant unrest at UK airports, with long queues to clear passport control.
Hanover-based Tui said it had doubled its standby aircraft and increased the number of staff at key customer touchpoints, but warned flight disruptions remained higher than usual this quarter.
For the upcoming peak summer season, however, the company said bookings have reached 90% of 2019 levels, a figure that is expected to reach near pre-pandemic volumes as the weeks go by.
CFO and new Tui boss Sebastian Ebel said he would hold “intense” discussions with airports and airlines, as well as resorts, as he seeks to improve the customer experience .
Ebel, who will take over as chief executive at the end of next month when Fritz Joussen steps down, said “the entire European aviation industry continues to face challenges”.
The company warned that it was difficult to anticipate the impact the Covid-19 pandemic and Russia’s large-scale invasion of Ukraine would have on consumer demand and confidence, but it did still expects to post “significantly positive” underlying earnings this fiscal year.
Julie Palmer, partner at Begbies Traynor, said: ‘We might want to jump on a jet and get away from the beach, but the chaos at airports makes that more difficult, regardless of the high demand from holidaymakers or the extra capacity of TUI. .
‘Holiday business interests, which have spilled over into hotels, cruises as well as airlines, insulate it to some degree from understaffed airports, but many consumers are looking at pictures of people sleeping on the ground at airports and refrain from making reservations until it is clearer that they will actually be boarding a plane.
Shares of Tui Group closed down 1.4% at 145.35p on Wednesday, meaning their value has halved in the past six months.