Travel giant TUI posts surprise early winter profit amid Europe's holiday boom
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Europe's largest travel operator TUI has reported far better-than-expected quarterly results as it swung to a profit on the back of robust travel demand in the run-up to the winter months.
TUI reported an operating profit of €6m in the three months to the end of December, versus a loss of €153m in the year-earlier period.
Europe's airlines are entering 2024 with robust outlooks as travel demand is expected to surpass pre-pandemic levels despite economic uncertainty, delays in plane deliveries from manufacturers, and rising jet fuel prices.
TUI's first-quarter beat is a positive signal for the airline sector as a whole. The first half of its financial year is usually weak with the bulk of annual profit coming from the main April to September summer season.
"These updates highlight the strength of demand for holidays at present," said Dudley Shanley, an analyst at Goodbody, in a research note. "This summer should be very strong for... the European airlines."
The Frankfurt shares have dropped around a fifth since the start of 2023. Chief financial officer Mathias Kiep told shareholders during the company's annual meeting this week that the "share performance was and is clearly unsatisfactory".
The company has recommended that shareholders vote to remove TUI from the London Stock Exchange, in a blow to the British exchange.
Higher prices and bookings helped to lift TUI's earnings in the first quarter, with the company serving 3.5m travellers, compared with 3.3m in the year-earlier quarter.
"People's willingness to travel is still high, despite a market environment that remains challenging. We are thus creating the basis for TUI's future profitable growth," said TUI chief executive Sebastian Ebel.
Deliveries of Boeing Max 737 10s are expected to be delayed but Max 737 8 planes on order should arrive on time, Mr Ebel said, adding that some leasing deals have been extended to ensure capacity.
Customer numbers are set to hit 20m this year, reaching pre-pandemic levels, up from 19m last year, Mr Kiep said.
TUI also maintained its outlook for a 25% increase in operating profit in the 2024 financial year which ends in September, and also set a medium-term target for a compound annual growth rate of 7% to 10%.
- Reuters