Tui swings to surprise profit on bumper demand

Tui beat first-quarter expectations by turning a profit on strong travel demand.

Europe’s biggest travel operator posted an operating profit of €6m (£5.1m), despite expectations of a €102m loss for the period, according to data from the London Stock Exchange Group. .

The Hanover-based company, which posted a loss of 153 million euros in the first quarter of last year, also maintained its outlook for 25 percent growth in operating profit in 2024.

Tui also set a medium-term target for a compound annual growth rate of 7 to 10 percent.

Airlines across Europe are enjoying more positive trading conditions after Covid-19 slowed their performance during a turbulent few years.

But travel demand is expected to exceed pre-pandemic levels despite economic uncertainty, delays in aircraft deliveries by manufacturers and rising jet fuel prices.

Tui was boosted by higher prices and bookings, which helped boost its profits in the reported period, with the company welcoming 3.5 million travelers, compared to 3.3 million travelers in the same quarter of the year. last year.

Tui boss Sebastian Ebel said: “People’s willingness to travel remains high, despite a market environment that remains challenging.” In this way we are laying the foundation for Tui’s future profitable growth.”

The first quarter is typically the weakest for airlines, as bookings are lowest in the first three months of the year.

Commenting on the results, Sophie Lund-Yates, senior equity analyst at Hargreaves Lansdown, said: “TUI has seen record sales as resilient consumers take to the airwaves.

“Much of the operational work TUI has done means it is in a better position to capture this demand.

‘Efforts to expand the offering of higher-end hotels in its hotel portfolio are a smart move and could help it remain competitive if lower-income earners start to stop booking holidays.

‘There are doubts about TUI’s possible decision to abandon its London listing. The added complexity and cost of maintaining dual listings since Brexit has led others to decide to follow a similar path. “While this doesn’t change the business case much, the outlook for London is not ideal.”

It was reported on Sunday that efforts to stop TUI from defecting from the London stock exchange had been dealt a blow after two shareholder advisory groups backed its decision to exit.

The travel company’s executive and supervisory boards recommended that shareholders vote to delist the company from the London Stock Exchange at Tuesday’s annual general meeting.

The firm said having a single stock listing in Germany could better reflect its ownership and trading patterns, in what would be a blow to the UK market.