Weak pound and airline disruption put huge dent in TUI profits

A weaker pound, airline disruption and the late Easter holidays caused TUI’s third-quarter pre-tax earnings for its northern region, which includes the UK, to plunge more than 80% to €16 million.

Overall, the group’s pre-tax earnings for the three months to the end of the June were down 12.7% to €193.4 million.

In the nine months from October 1 to June 30, the group’s pre-tax earnings were up €57.7 million to €65 million following a 6.3% increase in turnover to €11.8 billion.

"Our sector earns its profits in the fourth quarter. We have delivered a profitable operating result already after nine months for the second year in a row," said CEO Fritz Joussen

"For the full year, we expect to deliver double-digit earnings growth for the fourth consecutive time. We have considerably reduced our seasonality and thus our susceptibility to external challenges through the Group’s transformation focussing on hotels and cruises.

"TUI is in good health, we are flexible, deliver a strong operational performance and invest in our growth segments while maintaining our cost discipline. Early bookings and sustained growth at hotels and cruises limit the impact of the prolonged warm weather across Northern Europe.

"We reiterate our guidance for the full financial year and expect our underlying EBITA to grow by at least 10 per cent."

Earnings at TUI Hotels & Resorts were down almost 4% to €77.7 million due to the negative impact of currency fluctuations, but its average occupancy increased from 75% to 80% at rates similar to the same period last year.

Earnings from its three cruise brands, including Marella, were up 35.5% to €90 million. The average daily rate paid by passengers on Marella was £138, up from £126 during the third quarter of last year and the cruise line managed to sustain full ships.

Bookings for summer 2018, as of the end of last month, are ahead of the previous year, it said.

"The high level of early bookings helps to offset the impact of the sustained good weather in our key markets this summer," it said in a trading update. "Spain remains the top destination. Turkey has caught up strongly and continues to record strong growth in bookings, along with North Africa and Greece. Destinations such as Cyprus, Croatia or Bulgaria also report good growth in bookings."

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