Travel company sees strong earnings despite Tunisia attack

Shares in the world’s largest leisure tourism group, TUI, surged yesterday after it indicated it was on course to record strong earnings growth despite the Tunisian beach massacre.

It said summer trading had been robust and it now expected underlying core earnings to rise by 12.5%-15% in the current financial year, against a previous forecast for 10%-15%.

European holiday companies have had to cope this summer with the impact of an attack on a beach massacre in Tunisia in late June that killed 38 people, 33 of whom were TUI customers.

The Greek financial crisis has also affected tourist travel.

Cancelled holidays to Tunisia would cost between €35m and €40m this year, said TUI co-chief executives Peter Long and Friedrich Joussen.

Shares in TUI, which had lost about 10% of their value since the day before the June 26 attack in Tunisia, climbed 8% at one stage yesterday.

TUI and rival Thomas Cook rushed to pull holidaymakers out of Tunisia after Britain and other countries told them to leave. Trips to the North African country have been cancelled until October, leaving TUI with empty hotels.

Mr Long was not optimistic that TUI’s full holiday programme in Tunisia would return any time soon. “I sadly don’t think that we’re going to see a full reinstatement of the programme in the near term,” he said.

Thomas Cook said in July that its annual profit would be reduced by £25m (€35m) due to events in Tunisia and Greece.

“TUI appears to be outperforming Thomas Cook and handling the challenges of Greece and Tunisia,” said Numis analyst Wyn Ellis, adding that the outlook was encouraging.

This summer’s robust demand has been driven by strong appetite for cruise holidays.

Holidaymakers in northern Europe were deterred from booking trips to Greece in late June and early July due to concerns over Greece’s potential exit from the eurozone.

TUI said that in recent weeks there had been a recovery in bookings to Greece, which accounts for about 10% of its holidays, and overall bookings there were up year-on-year.

Shares in Thomas Cook also rose yesterday, reflecting TUI’s positive update.

Asked about the situation on some Greek islands, notably Kos, where there have been clashes between police and migrants, TUI’s Joussen said it was not affecting bookings at the minute.

Reuters