Tui boss voices optimism despite ‘very challenging’ market

Tui reported “solid” results for the three months to June despite a 46% fall year on year in underlying operating profit to €101 million.

Summer 2019 bookings across the group’s source markets and airlines were down 1% year on year to August 4, but with average prices 1% up.

Group bookings were 3% down year on year at the time of the previous trading update.

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Tui chief executive Fritz Joussen said: “We expect the recent positive [booking] trend to continue.” Late bookings last year were hit by the heatwave across Europe.

Turnover in the quarter rose 3.7% year on year to almost €4.75 billion.

Joussen said: “Our underlying business remains robust despite the challenging environment.”

But he described the airline and tour operator markets as “very challenging”, saying: “There is a lot of competitive pressure with the airlines.

“It is a difficult market. People are travelling but making decisions later. People have the impression there is shortage of [holiday] supply.”

He described Tui’s tour operator markets and airlines as “under cyclical pressure” but pointed out these contribute just 30% of Tui’s profits these days, with 70% coming from the group’s hotels and resorts, cruises and destination experiences.

Joussen said: “We have significantly reduced our dependence on traditional tour operators.”

He added: “The transformation of our group will continue. We are pursuing our digital transformation to develop Tui into a global platform organisation.”

Joussen noted the fall in the UK pound, saying: “This decrease is difficult for British travellers. It means price increases of a little more than 4% – not little but not disastrous.”

On Brexit, he said: “Who knows what will happen. The currency movements are the main effect. For UK travellers, Brexit is not attractive, but it is not in our hands.”

Tui carried just over six million customers in the three months, on a par with the previous year, and its full-year forecast remained unchanged from its update in March when its forecast profit was revised down “due to the grounding of the 737 Max” aircraft.

Joussen put the cost of the grounding at €144 million in the quarter and €300 million over the financial year to the end of September.

Asked about the proposed takeover of Thomas Cook, Joussen said: “Thomas Cook is a big competitor. We pay attention to the process, but we are not an active participant.”


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