Tui Group’s past quarter earnings from the UK were hit by flight disruption, a weaker pound and the negative impact of an early Easter.
Underlying profits [ebitda] from the travel group’s northern region, which includes the UK and Ireland alongside Nordics, Canada and Russia, plunged by 80.2% year-on-year from €81 million to just €16 million.
The world’s leading travel group revealed a total €13 million one-off impact due air traffic control strikes in France in the three months to June 30. The negative Easter effect cost €19 million in the UK.
“In the UK, demand remained resilient in the quarter under review, however, margins continued to be impacted by the weaker pound sterling,” Tui said.
“Earnings in the UK were also impacted by airline disruption in Europe and the negative Easter effect.”
Overall turnover in Tui Group’s third quarter grew by 5% to more than €5 billion, with underlying earnings up 2.4% to €227 million, excluding the impact of an earlier Easter. Customer numbers grew by 4.4% in the period.
Underlying earnings for the nine months from October 2017 improved by €57.7 million year-on-year to €65.0 million euros while turnover was up by 6.3% to €11.8 billion.
Total summer 2018 booking levels are ahead of this time last year despite the prolonged hot weather, with bookings up by 4% and turnover by 5%, the company reported this morning.
“The high level of early bookings helps to offset the impact of the sustained good weather in our key markets this summer,” Tui said.
“Spain remains the top destination. Turkey has caught up strongly and continues to record strong growth in bookings, along with North Africa and Greece.
“Destinations such as Cyprus, Croatia or Bulgaria also report good growth in bookings.”
Cruises have delivered higher rates and better earnings despite significantly increasing capacity.
The group’s Turkish and North African hotels are again recording a “considerable increase” in booking levels.
“High demand is also seen for Greece. Tui hotels in Spain continue to deliver good booking levels, in particular against strong prior-year comparatives,” the company said.
Group CEO Fritz Joussen said: “Our sector earns its profits in the fourth quarter. We have delivered a profitable operating result already after nine months for the second year in a row.
“For the full year, we expect to deliver double-digit earnings growth for the fourth consecutive time.
“We have considerably reduced our seasonality and thus our susceptibility to external challenges through the group’s transformation focussing on hotels and cruises.”
He added: “Tui is in good health, we are flexible, deliver a strong operational performance and invest in our growth segments while maintaining our cost discipline.
“Early bookings and sustained growth at hotels and cruises limit the impact of the prolonged warm weather across northern Europe.
“We reiterate our guidance for the full financial year and expect our underlying ebitda to grow by at least 10%.“