TUI blames hot summer and weak pound as losses double
TUI has blamed last year’s ‘unusually long and hot summer’, overcapacity in the Canaries as customers switch to Turkey and North Africa, and the weak pound for its losses doubling in the first quarter.
It saw losses jump from £32.2 million to £75.7 million in the first three months of the year.
Last week the travel giant downgraded its profit forecast saying that instead of 10% rise in earnings it was predicting earnings to remain flat.
Despite the downgrading, chief executive Fritz Joussen insisted the group is ‘financially strong with a sound strategic and operational positioning’.
"The overall trends for our sector are intact. Travel and tourism remain a growth market. Customers continue to travel, but they are currently resistant to increases in price," he said.
"During this consolidation phase in our sector, it is particularly important to adequately participate in market growth. TUI has a good strategic and operational positioning, and the transformation of the Group as a digital platform company is progressing."
While hotels and resorts, cruises and TUI’s destination experience divisions performed strongly, TUI said its tour operation and airline suffered from continued ‘sector challenges’.
It said although bookings and average prices are in line with last year, margins are lower, prompting the new profit guidance.
TUI is struggling to sell higher margin holidays to UK customers due to the weak pound.
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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