Tui today pledged to run alternative flights to its holidaymakers booked with collapsed Thomas Cook Airlines.
Europe’s largest travel group revealed it was “preparing measures” to support those affected by the failure of its main rival in the UK.
Tui Group chief executive Friedrich Joussen, issuing a trading update this morning, said: “Where Tui customers are booked on Thomas Cook Airlines flights and these are no longer operated, replacement flights will be offered.
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“We are currently assessing the short term impact of Thomas Cook’s insolvency under the current circumstances, on the final week of our full year 2019 financial result.”
He confirmed Tui’s disclosure in March that the group’s annual earnings [ebitda] would be 26% down on last year’s €1.177 billion due to ongoing “external challenges” such as the grounding of the Boeing 737 Max aircraft, airline overcapacities and continued Brexit uncertainty.
While the summer 2019 season is closing out in line with expectations,Joussen warned: “These external challenges will continue in full year 2020 – therefore, we will focus on becoming more cost competitive in our Markets & Airlines business to protect and extend our market share where possible.
“Going forward, our two key digital strategic initiatives will deliver greater customer reach in new markets complementary to our existing markets, through our new global distribution network online travel agent platform [GDN-OTA] as well in our Destination Experiences markets through our Musement platform, driving further demand to our own Holiday Experiences businesses.
“Tui is well-positioned to become an integrated digital tourism platform business.”
Resumption of 737 Max flights remains subject to the clearance decision of the civil aviation authorities.
“To ensure we are sufficiently covered for peak periods during our winter 2019-20 programme, we anticipate a smaller level of aircraft replacement costs to be incurred, compared to summer 2019,” Tui said.
The operator reported a “clear return to growth” to Turkey and North Africa with the help of stronger late bookings and selling prices.
But overall summer bookings are expected to end up flat on last year’s levels with average selling pries up by just 1%.
A third of the winter 2019-20 programme is sold – broadly in line with last year.
However, Tui said: “The weaker demand environment as previously discussed remains evident and we are seeing bookings down in line with our capacity reduction of 2%, with average selling price up 4% on prior year.”
The group’s cruise businesses saw high summer occupancy levels and “robust” daily rates despite a significant increase in overall capacity, particularly in the German market.
The company expects to see strong customer growth in its Destination Experiences division in the final quarter of the year, driven by both underlying growth and the acquisitions of Destination Management and Musement.
“This year has seen the successful integration of both companies and together with the planned expansion of both the product portfolio and third party distribution, we have created a solid base for future growth in this attractive and fast growing market,” Tui added.
Meanwhile, Tui Blue is on course to become the group’s flagship hotel brand from ten to 100 properties by the end of 2020 through the repositioning of existing hotels.
Tui said: “Our diversified portfolio of destinations continues to deliver balanced results with demand shifting from western to eastern Mediterranean.
“As anticipated, we are seeing demand for Spain normalising with both rates and occupancies coming off record highs in recent years, offset by better results in our Turkish hotels.
“By the end of this financial year, we will have successfully opened 70 new hotels since merger, well ahead of our 60 target set at the time of the merger.
“Going forward we will continue to further diversify our asset portfolio and selectively invest in our key hotels brands such as Riu, Robinson and Blue Diamond.”
The trading update was issued ahead of the company entering its close period ahead of reporting its full year results for the year to September 30 on December 12.
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