Travel giant TUI sees holiday demand solid in rest of summer

Hanover, Germany-based TUI had earnings of €48m in the fiscal third quarter, before costs of €75m from disruptions to air traffic. Picture: Peter Byrne/PA Wire.

TUI AG said it remains on course to post a profit this year, with bookings and prices looking strong for the rest of the summer even as Europeans suffer a cost of living squeeze.

The world’s biggest tour operator expects to report “significantly positive” underlying earnings before interest and tax for the 12 months through September, it reiterated Wednesday.

Hanover, Germany-based TUI had earnings of €48m in the fiscal third quarter, before costs of €75m from disruptions to air traffic. Analysts had predicted a profit of about €29m euros.

Still, shares fell after the company failed to provide an outlook beyond September. The stock slid as much as 4.3%, and was 1.6% lower by 8:26 a.m. in London.

Europe’s travel industry is seeing bumper summer sales as an end to Covid curbs unleashes pent-up demand for vacations. Airlines and holiday firms are reaping profits from high air fares and room prices, even as they grapple with a wave of delays and cancellations linked to a region-wide labor shortage.

TUI said that average prices are currently around one-fifth above pre-coronavirus norms, with bookings at 90% of the summer 2019 level.

Chief Financial Officer Sebastian Ebel, who takes over from longtime Chief Executive Officer Fritz Joussen in October, said the business had performed well “despite the operational challenges in the European tourism sector.” 

The company’s hotels and resorts division posted positive results for the fourth quarter in a row, while the cruises arm ended losses earlier than expected, according to the release, which didn’t provide guidance on the impact of higher costs and a squeeze on disposable incomes as inflation climbs.

• Bloomberg