Tui suffers double-digit earnings drop while heatwave holds back summer bookings
The travel giant said summer bookings were unlikely to outperform due to the hot weather.
Shares in Tui tumbled 9% after the travel giant suffered a double-digit drop in third-quarter earnings and said summer bookings were unlikely to outperform due to the recent heatwave.
The company saw underlying earnings for the three months to June 30 slump 18% to 193.4 million euro (£174 million), having been hit by currency fluctuations and the earlier timing of Easter.
Tui’s turnover for the third quarter rose 5% to 5 billion euro (£4.5 billion).
Airline disruptions cost the business 13 million euro (£11.7 million) over the period, having been knocked by industrial action including air traffic control strikes in France.
“Action is being taken to address our operational resilience in light of this,” Tui said.
The company said summer bookings were up 4%, with the high level of early bookings having helped “limit” the impact of the stretch of good weather in key markets.
“However, outperformance is unlikely,” the company said.
Across its UK business, bookings are ahead of the prior year, but Tui said margins have been squeezed due to both the weaker pound and weather conditions.
The travel company’s shares were down more than 9.1% in morning trading.
Chief executive Fritz Joussen said it was a “good third quarter”, but stressed that the travel 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. For the full year, we expect to deliver double-digit earnings growth for the fourth consecutive time,” he said.
“We have considerably reduced our seasonality and thus our susceptibility to external challenges through the group’s transformation focusing 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.”
The travel giant said bookings for the winter season have “started well” and are ahead of the prior year, with a year-on-year increase in demand for Turkey and North Africa as well as long-haul destinations.