Tui Group’s revenues take off as holidaymakers return to the skies
Tourism specialist Tui Group (Tui) has begun to show signs of recovery from the pandemic, recording a four-fold increase in revenues powered by robust takings across its core businesses.
The group’s adjusted EBIT went up to a positive €409m – up from last year’s €2bn loss.
The strong headline numbers contributed to a bumper uptick in revenues from €4.73bn last year to €16.54bn over the same period.
This reflects the return of customers in the first post-pandemic year with minimal travel restrictions.
Europe’s largest travel group even managed to achieve positive earnings in the peak summer quarter for the first time since the Covid crisis.
The number of summer customers climbed to 13.7m, reaching 93 per cent of levels achieved before the pandemic.
Nevertheless, the company remains in the red, recording an overall loss of €212.6m, with earnings per share also in minus figures.
The company still also holds €3.4bn of debt on its books from the pandemic.
Despite the summer uptick, Tui is struggling to attract the same number of holidaymakers for its packages that it managed prior to the pandemic with the company making losses on Northern Region and Western Region customers of €101.6m and €31.5m respectively.
It is also dealing with challenging economic headwinds such as inflation, and reduced demand amid a cost of living crisis which is eating into people’s wallets.
Shares in the company were up 2.57 per cent on the FTSE 250 this morning, with traders responding positively to the results.
Ahead of the results, Tui announced it had agreed to repay at least €730m of German state aid used to help bailout the company during the pandemic.
Under the deal, Tui will fully repay the silent participation provided by the government’s Economic Stabilisation Fund (WSF) alongside a remaining warrant bond until the end of 2023.
In return, the travel group would receive back the option rights to Tui shares held by the WSF.
Tui also plans to significantly reduce credit lines provided by state development bank KfW.
The repayments will be refinanced through capital increases.
Richard Finch, consumer analyst at Edison Group argued the latest update “demonstrates that the group has put the covid crisis of the last couple of years behind it.”
Commenting on potential headwinds, Finch raised the prospect of strikes limiting flights over the festive period.
He said: “Shareholders will be keeping a close eye on how TUI and other companies will be impacted by the ongoing industrial action planned by baggage handlers this Christmas and New Year. With TUI and EasyJet warning travellers of major disruption and cancellations, there is a risk that prolonged action may impact the industry as it moves into a new post-pandemic phase of growth.”