TUI will face questions from investors tomorrow on how it plans to ride out a challenging market after downgrading its earnings forecast for 2019.
At its AGM tomorrow, it is expected to outline to worried investors its plan of action to address the ‘headwinds’.
TUI had previously forecast a 10% growth in earnings for this financial year, but has now admitted it expects earnings to stay flat.
It has blamed a number of factors, including late bookings and weaker margins due to the continued impact of last summer’s heatwave and a continued weakness of the pound, ‘making it difficult to improve margins on holidays sold to UK customers’.
It said margins have also been hit by a shift in demand from the Western to Eastern Mediterranean which has created ‘overcapacities’ in certain destinations such as the Canaries.
TUI said 34% of its summer 2019 programme has been booked to date but while this is broadly in line with last year, margins are weaker.
It told investors it was taking action to address the ‘headwinds’, including ‘harmonisation’ under one leadership to cut costs and improve efficiencies.
It said it was also working to cut distribution costs by shifting to ‘more direct, more online, more mobile’ sales and to drive revenues by upselling activities and excursions.
And it added: "We also expect that the continued sector headwinds may trigger market consolidation, and that TUI could be a beneficiary of this."
TUI’s first quarter results will be released tomorrow (Tuesday), followed by its AGM.
