Tui’s winter loss grows as late Easter and Spanish overcapacities bite

Tui revealed on Wednesday (15 May) its first half (H1) net loss grew more than 36% from €210.6 million to €287.2 million.

It comes after the operator issued two profit warnings earlier this year: the first in February citing the summer 2018 heatwave and a weak pound; the second came in late March following the grounding of the Boeing 737 MAX.

Tui said the grounding could dent its full-year earnings by more than a quarter – €300 million – if the aircraft, of which it has 15, remained out of service during the summer season.

The operator reiterated on Wednesday its outlook remained broadly similar should it have to maintain its contingency arrangements for the grounding throughout the summer.

Meanwhile, Tui’s loss in underlying H1 Ebita – earnings before interest, tax and amortisation – grew from €169.7 million to €300.6 million.

Tui said its figures had been hit by 2019 travel and destination trends including overcapacity in Spain, particularly the Canaries, which had reduced its margins.

The resurgence of Turkey and the eastern Mediterranean, meanwhile, while positive for the business will be reflected in its H2 results.

Easter, said Tui, was another factor, the Easter weekend falling over 21 April meaning any bookings – which Tui said were “traditionally strong” – won’t be reflected until the third quarter.

The operator’s full-year guidance for Ebita, based on it delivering €1.177 billion in H1 2018, is -17% should the 737 MAX resume flying by mid-July (an effect of -€200 million) or -26% should the aircraft remain grounded for the summer (an effect of -€300 million).

“Tui is on track, both strategically and operationally, and is well positioned,” said chief executive Fritz Joussen. “That is why 2019 will be another solid year.

“Our core businesses with our own hotels, cruises and destination experiences and activities remain strong and currently deliver around 70% of our earnings.

"Tui will emerge as a stronger, more efficient and more profitable group from the current consolidation of our sector in Europe.

“Our transformation from a traditional tour operator to a hotel and cruise company has been successfully completed.

"Our transformation as a digital and platform business is progressing massively and will deliver crucial results for our business and future growth.”