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Published on Tuesday, February 12, 2019

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.


 

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