Heat wave causes Tui to double losses
Holiday giant Tui has blamed last year’s “unusually long and hot summer” and the weak pound as first-quarter losses more than doubled.
The group – which last week sent shares tumbling after warning over full-year profits – reported seasonal underlying losses of €83.6m (£73.3m) for the three months to December 31 against losses of €36.7m (£32.2m) a year earlier.
It said results were impacted by last year’s prolonged hot weather across northern Europe, combined with the Brexit-hit pound and overcapacity in western Mediterranean destinations, such as the Canary Islands.
The group said summer 2019 bookings were “broadly” in line with a year earlier and holiday prices had held firm, but cautioned its profit margins were taking a hit.
“he market environment for all tour operators remains challenging.
Tui sparked a hefty fall in shares last week when it warned underlying earnings for the year to September 30 were now expected to come in flat at around €1.17bn (£1bn).
This compares with previous guidance for at least 10% growth in earnings.
Tui had previously been seen to be weathering the market woes that have already knocked rivals such as Thomas Cook, which is now looking at a possible sale of its airline business.
Fritz Joussen, chief executive of Tui, said:
The overall trends for our sector are intact.
Travel and tourism remain a growth market.
Customers continue to travel, but they are currently resistant to increases in price.
Over its first quarter, Tui said turnover rose 4.4% to 3.7 billion euros (£3.2 billion).
Its markets and airlines arm – which is bearing the brunt of the tough industry conditions – saw losses widen to €177.7m (£155.8m), up from €140.8m (£123.4m).
Its holiday experiences division – which accounts for 70% of annual earnings and includes hotels and resorts and cruises – posted an 11.8% fall in earnings to €111m (£97m).
But the group said overall customer numbers grew by 1.2% in the first quarter.