Published on Wednesday, May 15, 2019

TUI strained by big shift in travel trends as winter loss deepens

TUI has blamed over-capacity in Spain, the late Easter and the forced grounding of its 737 MAX aircraft for a 36% increase in its first half net loss to €287 million.

It also pointed out that last year's result was boosted by €38 million by the sale of several RUI hotels, which was not repeated this year.

In a financial update, the operator said: "The results of the first six months are unilaterally strained by significant shifts in travel trends and destinations for the full year 2019: overcapacities to Spain, in particular the Canaries, and consequently lower margins are having an impact in the first half of full year 2019, whilst the positive development of bookings to Turkey and the Eastern Mediterranean will become visible only in the second half as most of the countries in this region are summer destinations."

It also added that the late Easter, which fell in the third quarter this year, took out a further €22 million from its first half earnings.

Group turnover was up 1.7% to €6.68 billion during the first half, but summer bookings are 3% down on this time last year, although the average selling price is 1% up.

The group reiterated that earnings for the full year would be down 17% on last year's €1.177 billion, assuming that the 737 MAX, which have been grounded worldwide for safety reasons, will resume flying by mid-July.

The grounding of the aircraft has already cost TUI €200 million. If it isn't clear this month that the planes will be airborne again by the summer peak, TUI said it will have to extend its contingency measures for the rest of the season, which will cost it an extra €100 million.

Announcing the first half results this morning, TUI CEO Fritz Joussen said: "TUI is on track, both strategically and operationally, and is well positioned. That is why 2019 will be another solid year."

He insisted the group's core businesses are 'highly profitable and positioned for growth'.

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