Tui ticks off the Corona crisis

Tui ticks off the Corona crisis

The Tui travel group has so far had fewer bookings in the third year of Corona than before the pandemic, but sees itself on the way back to profitability despite customers’ concerns about inflation. The Hanover-based company announced on Wednesday that bookings with 11.5 million guests were 90 percent of the level in summer 2019. Holidaymakers are booking at shorter notice than before and spending more money, it said, partly because they opted for longer trips and more expensive accommodation.

The outgoing CEO Fritz Joussen even declared the corona worries of the Tui rescued by the state to be over. Thanks to the higher travel prices, the summer quarter will be the strongest in terms of sales in the company’s history. “The crisis is over,” said Joussen, who surprisingly announced in June that he would resign after a decade on September 30. Not all problems have been solved – for example with a view to the debt. Tui must come back to profitable growth. But the crisis itself was over, stressed Joussen.

Very few customers do not go on holiday completely
But with inflation, a new challenge is just around the corner. The designated Tui boss and former CFO Sebastian Ebel does not fear that the increased costs could thwart customers’ travel plans. Even if the disposable income of the customers is decreasing, very few of them give up their holidays completely. However, it is conceivable that fewer long-distance trips will be booked in the future and that there will be more demand for closer destinations, such as Egypt instead of the Dominican Republic.

For the current financial year, Joussen and Ebel expect a “significant” operating profit before special effects (adjusted EBIT). In the coming financial year, a positive business result is possible even after deducting taxes and interest. “I think we’re on the right track there,” said Ebel.

In the third fiscal quarter of 2022 (April-June), however, it was not enough for a profit. Although sales jumped from 650 million to 4.4 billion euros compared to the same period of the previous year, which was affected by the pandemic, the adjusted quarterly operating result was negative at 27 million (previous year’s quarter: minus 670 million). The group management justified this primarily with flight cancellations and delays in Great Britain, which would have caused special costs of 75 million euros.

The recovery should be used in particular to further reduce the debt, which had risen sharply during the Corona crisis, explained Ebel. From the end of March to the end of June, Tui had already reduced the debt burden by 600 million to 3.3 billion euros.

Meanwhile, Tui customers are not expecting a completely new travel experience under the new management. There will be no completely new strategy, said Ebel. However, many of the changes that have been initiated in recent years have not yet become fully visible. This now needs to be developed further. As examples, Ebel mentioned the pure booking of hotels and the Tui Musement area, which includes a platform for tour and activity providers.

Samuel Edwards
Samuel Edwards is the name you must have heard many times while reading reports related to Finance, that's what he is good at. From Major Investments to Stock Market Updates, he got 'em all. Be ready to blow your mind by the mind-blowing reports of Finance World from Samuel Edwards.