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Tui stays on track for annual profit

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HANNOVER – Despite the chaos at many airports, the world’s largest travel group, Tui, is expecting almost as many holidaymakers as before the pandemic. As a result, the group should return “significantly” to daily profitability over the current financial year until the end of September.

This was confirmed by outgoing CEO Fritz Joussen and his designated successor Sebastian Ebel on Wednesday in Hanover. However, that didn’t work out in the last quarter – mainly because Tui had to cancel many flights in Britain.

At the Frankfurt Stock Exchange, the news was first recognized with price cuts of up to four percent. After an hour and a half, however, Tui’s share price turned into a profit zone and recently rose almost one percent to EUR 1.7115.

Industry expert Richard Clarke of analytics firm Bernstein Research expects a sunny summer for the travel group. The question, however, is how European consumers will behave next given the rising cost of living, he wrote in the morning.

During the last quarter, bottlenecks at many airports also caused problems for Tui. In May and June, the group had to cancel around 200 departures – notably in Great Britain and mainly in Manchester, said financial director Ebel, who will take over the management of the group on October 1. The deletions cost the group 75 million euros. Additionally, given the upheaval, customers have been reluctant to make reservations, the manager said.

Business is picking up now. So far, Tui has counted the bookings of 11.5 million customers for the summer, around 90% of the 2019 level. In the third quarter to the end of June, 5.1 million holidaymakers were traveling with You. That’s 4.2 million more than a year earlier, when business was only on the back burner due to the corona pandemic.

Sales therefore jumped year on year from 650 million euros to 4.4 billion euros. Due to the impact of flight cancellations, adjusted operating income (adjusted EBIT) was negative at 27 million. A year earlier, the operating loss had even amounted to 670 million. In the end, the shareholders this time recorded a deficit of around 357 million euros after a less than 935 million euros in the same period last year. Analysts were only expecting a double-digit loss of $1 million.

Tui is struggling with the sharp increase in fuel costs. Due to its strained financial situation due to the pandemic, the group had hardly entered into any jet fuel hedging transactions this year. According to the board, he only looks better for the winter and next year.

On the other hand, customers have spent an average of 18% more money on their Tui holidays so far this summer than in 2019. Comparable trips have not become as expensive by this measure. On the contrary, people are booking package holidays, more comfortable rooms and longer stays more often than before, the council said. The extra income also helps the group cover increased kerosene costs.

Meanwhile, outgoing Tui boss Joussen said the state-rescued travel group’s corona worries were over. Thanks to higher travel prices, the summer quarter will be the strongest in terms of sales in the company’s history. “The crisis is over,” Joussen said. However, this has not yet solved all the problems – for example with regard to debt.

Tui’s management hopes to further reduce the mountain of debt from the Corona crisis with the recovery from the pandemic. Between the end of March and the end of June, Tui had reduced the weight of the net debt from around 600 million to 3.3 billion euros.

For the current financial year, Joussen and Ebel expect “significant” operating profit before special effects (adjusted EBIT). In the coming financial year, a positive business result is possible even after deducting interest and taxes. “I think we’re on the right track there,” Ebel said.

Meanwhile, inflation is a new challenge. According to Ebel, however, he doesn’t expect rising costs to stop many customers from traveling soon. Even as disposable income declines, very few people are giving up vacations altogether, he said. However, it is conceivable that fewer long-distance trips will be booked in the future and that there will be more demand for closer destinations, such as Egypt instead of the Dominican Republic.

© dpa-AFX | Fig. : You | 08/10/2022 08:08

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Source aero.de

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