TUI swings to first post-pandemic profit with this summer ‘going very well’ despite deadly heatwaves
Tour operator TUI said it had swung to profitability for the first time since the pandemic on the back of soaring summer travel demand, with underlying pre-tax earnings of €169.4m (£145.28m), up by €196.5m year-on-year.
Third quarter group revenues surged 19 per cent on the prior year to €5.3bn (£4.55bn) which the company said was driven by both the higher volume and rising ticket prices. In total, revenues stood at 11 per cent higher than pre-pandemic levels.
The travel operator said that its booking forecasts for the summer period were unaltered at 12.5 million and a 6 per cent increase on 2022 – 95 per cent of pre-pandemic levels.
Chief executive Sebastian Ebel said “summer 2023 is going very well and demand for holidays remains high,” with the mediterranean remaining the “most sought-after destination for summer holidays.”
“The heatwave in Northern Europe in June and the wildfires in southern Europe have only dampened temporarily the previously strong development.”
The results come amid severe disruption from wildfires in Southern Europe and the Greek Island of Rhodes in the last few weeks, which had forced TUI to cancel all its flights to the region.
“Bookings had been impacted in the short-term as a result of the wildfires in Southern Europe and flight cancellations to Rhodes,” TUI said, but noted that demand had subsequently recovered as operations resumed, with bookings last week up 5 per cent year-on-year.
The Hanover-headquartered firm added that the evacuation of 8,000 guests, on top of flight cancellations and delays had resulted in a total cost of €25m (£21.49m).
“We continue to monitor the situation concerning the wildfires in Southern Europe and remain in close contact with local authorities. As events unfolded in Rhodes, the safety of our guests and colleagues in the affected areas was paramount.”
TUI’s long-anticipated return to pre-pandemic follows a strong year for firm, whose range of travel offerings – which include cruise ships, hotels and flights – have benefitted from a rebound in travel demand.
In its half year results in May, revenues flew past pre-pandemic levels to a cool £2.78bn, with bookings hitting reaching 12.9 million across the winter and summer seasons.
There had, however, been slight concern over the firm’s share price back in April, after it issued €1.8bn in equity to repay a Covid-related state aid grant from the German government. This had followed Tui losing its place as the UK’s largest tour operator to competitor Jet2 in February.
Emma-Lou Montgomery, associate director for personal investing at Fidelity International, said: “the sun doesn’t always shine on Tui, but the Anglo-German tour operator has just seen its first profitable third quarter since the pandemic and says it’s on track for a strong summer season.”
Montgomery said that despite challenges from the wildfires, the “drop-off in demand proved to be only a blip,” as TUI reported higher bookings last week.
She added: “The financial impact of the wildfires on Tui will inevitably last far longer, adding around €25m to Tui’s full year 2023 costs – but the group says business is ‘close to normal’ and earnings are set to be ‘substantially higher overall this year.’”