TUI – Brighter Conditions In Q3, Outlook Less Clear

Published on

TUI AG (LON:TUI)’s third quarter revenue rose from €649.7m to €4.4bn, reflecting the effects of increased travel and tourism activity following the pandemic. The group’s faced additional costs of around €75m relating to flight disruption caused by wider aviation industry labour shortages. Excluding these costs, TUI recorded underlying operating profit of €48m, compared to heavy losses last year.

Summer is on-track to see capacity and customers close to pre-pandemic levels. TUI said “we re-confirm our expectations to return to significant positive underlying EBIT for financial year 2022 and remain committed to further reducing debt and German Government exposure.”

Get The Full Walter Schloss Series in PDF

Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q2 2022 hedge fund letters, conferences and more


Find A Qualified Financial Advisor

Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now.

The shares were unmoved following the announcement.

Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown:

“TUI has had what can only be described as a strong third quarter – crucially, forward bookings for the final dregs of the summer season are looking well placed. The drains on cash when you have both planes and hotels to fill are enormous, so this about-change couldn’t have come fast enough for the group. The bottom line has hit some further turbulence thanks to hefty costs associated with airport disruption, but there’s little the group can do about wider aviation industry labour shortages.

Instead, TUI is focussing on what it can control, like continuing to trim excess costs. The group’s hauling around an eye-watering debt pile when looked at in comparison to earnings, and bringing that down is a priority. Looking ahead, TUI needs to be careful it gets the balance right between addressing liquidity risk while spending enough to keep its competitive edge. A lot of holiday makers aren’t especially brand-loyal and simply want the best deal – a fickle client base in the current cost-of-living environment makes market-share growth potentially difficult.”

About Hargreaves Lansdown

Over 1.7 million clients trust us with £132.3 billion (as at 30 April 2022), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.