Tui blames Liz Truss financial disaster for ‘currency hit’
Gary NoakesTui has attributed its turnaround during the first quarter of its 2023/24 financial year, in part, to a recovery in currency rates following Liz Truss’s brief – and disastrous – reign as prime minister.
Tui made an underlying profit of €6 million in the last three months of 2023, its first quarter – the first time it has ever recorded a Q1 profit. The figure contrasts with a loss of €153 million in the same period in 2022, which followed Truss’s 44 days in office.
Truss was prime minister in September and October 2022, during which the pound crashed to a 37-year low when markets were spooked by a plan to increase borrowing by £70 billion.
Mathias Kiep, Tui Group chief finance officer, admitted latest Q1 figures were in part flattered by favourable currency movements, which contrasted with the previous Q1.
“We had the Liz Truss government in the UK with the impact on the pound. This was primarily happening in Q1,” he said during a Q1 results call on Tuesday (13 February).
A Tui spokesperson added: "At the time when the pound weakened, we were not sufficiently hedged against it. This year we expect to generate €100 million in hedging benefits."
Tui does not detail specific UK figures but includes them as part of its northern region, along with Ireland and the Nordic countries, which improved performance by around €70 million.
Kiep added he did not expect a similarly strong performance for the second quarter (January to March) as there was no recurring currency effect, while Tui had also sold its Canadian business in May 2023, which had been part of the northern region.
First quarter figures were also helped by a strong performance from cruise and hotels. It saw “significant uplift” in its hotels sector, which increased revenue from €70 million to €90 million with average daily rates (ADR) of €90. Cruise saw 96% occupancy with an ADR of €204, up 17%.
Kiep said the cost of living was not impacting travel purchasing. “What we continue to see is holidays are prioritised very highly,” he said.
Across its businesses, Tui said customer numbers had risen 2.7% to 1.24 million “returning to pre-pandemic levels”. Online distribution at 68%, was identical to prior year, as was direct distribution at 93%.
Tui said it remained on course for a 25% increase in pre-tax earnings for the full year.
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