Tour group TUI reported its first post-pandemic net profit on August 9 on the back of robust bookings and travel demand in the three months to the end of June, but said extreme weather and wildfires were set to impact its full-year earnings.
Airlines have reported strong results for the quarter as tourists have continued to flock to sun destinations across Europe in a post-pandemic travel boom that shows few signs of slowing.
The tour group, one of the world’s largest, reported underlying earnings before interest and tax at 169 million euros (USD 185.46 million) for the three months to June 30, the third quarter of its financial year, up from a loss of 27 million in the same quarter last year.
Revenue of 5.3 billion euros in revenue was up 19% from Q3 2022, beating some analyst expectations.
“We are investing today to continue to significantly grow profitably in the future,” said TUI Chief Executive Sebastian Ebel. TUI’s share price was up around 1% at 0807GMT.
The desire to travel may even strengthen next year, according to travel tech firm Amadeus, whose recent survey showed that 47% of respondents said international travel was a high-priority discretionary spending category for 2023 and 2024, compared with 42% who ranked it as such the previous year. Amadeus sampled travellers from Britain, France, the United States, Germany and Singapore.
Bookings also grew by 6% year-on-year, approaching pre-pandemic levels. That was despite prices rising 7% over last year, indicating that the higher cost of travel wasn’t dampening demand. The group said it had reduced its net debt by 1.1 billion euros to 2.2 billion euros, but analysts said more needed to be done.
“The debt level’s still eye-watering compared to profits, meaning dividends are likely off the table for now,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.
EXTREME WEATHER
TUI said measures would be taken to dampen the impact of wildfires and other climate-related effects, with Ebel adding that TUI could introduce new insurance for tourists going to areas impacted by climate change-related disruptions.
In particular, the wildfires in Rhodes, Greece meant approximately 8,000 TUI customers had to leave their hotels, TUI said. The cost of that will be reflected in the full-year results and is expected to be close to 25 million euros.
Ebel said that the Mediterranean region in Europe remained one of the top destinations for the tour group despite extreme weather.
“The heatwave in Northern Europe in June and the wildfires in Southern Europe have only dampened temporarily the previously strong development,” he said.
He added on a media call that he expects national governments in countries like Greece to do more to introduce wildfire protection measures.
