Heatwave dampens bookings at travel firm
SHARES IN Tui tumbled after the travel giant suffered a doubledigit drop in third-quarter earnings and said summer bookings were unlikely to outperform due to the recent heatwave.
The company saw underlying earnings for the three months to June 30 slump 18 per cent to £174m, having been hit by currency fluctuations and the earlier timing of Easter.
Tui’s turnover for the third quarter rose 5 per cent to £4.5bn.
Airline disruptions cost the business £11.7m over the period, having been knocked by industrial action including air traffic control strikes in France.
“Action is being taken to address our operational resilience in light of this,” Tui said.
The company said summer bookings were up 4 per cent, with the high level of early bookings having helped “limit” the impact of the stretch of good weather in key markets.
“However, outperformance is unlikely,” the company said.
Across its UK business, bookings are ahead of the prior year, but Tui said margins have been squeezed due to both the weaker pound and weather conditions.
Chief executive Fritz Joussen said it was a “good third quarter”, but stressed that the travel 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,” he said.
“We have considerably reduced our seasonality and thus our susceptibility to external challenges through the group’s transformation focusing on hotels and cruises.
“Tui is in good health, we are flexible, deliver a strong operational performance and invest in our growth segments while maintaining our cost discipline.”
He added: “I would be a little bit cautious this year. We have good visibility of at least 10 per cent but to caution that there will not be a massive outperformance on top of 10 per cent.”
The travel giant said bookings for the winter season have “started well” and are ahead of the prior year, with a year-onyear increase in demand for Turkey and North Africa as well as long-haul destinations.
We have delivered a profitable operating result. Fritz Joussen, chief executive of Tui