Tui suffers third-quarter loss after flight disruption

Flight disruption across Europe stifled trading at Tui in early summer, costing the tour operator €75mn and pushing it to a loss in the third quarter.

Sebastian Ebel, Tui’s newly appointed chief executive, said the company would “fight” for compensation from airport operators for the damage to business from the travel chaos.

“We are going for compensation,” said Ebel. He added that it was “very much on our agenda . . . to get something in the next coming month and it should be significant”.

Europe’s largest travel group hailed its “first broadly break-even quarter post-pandemic” and said that without the extra cost of flight cancellations and travel disruption, adjusted operating profits would have been €48mn in the three months to June 30. Instead, Tui booked a loss of €27mn over the period.

Tui said about 4 per cent of customers faced delays of more than three hours in May and June. But it added that it cancelled fewer than 200 flights over the same period, amounting to below 1 per cent of its summer schedule.

Tui said the disruption was “mainly caused by third-party suppliers and airports due to a shortage in ground handling and airports security staff, reliability issues with lease-in partners and supplier maintenance delays”. 

Manchester airport in northern England was hit hardest by the flight disruption. Ebel said the greater problems facing UK airports were caused in part to labour shortage issues.

Revenues across the group, which includes Tui’s airline, hotel and cruise businesses, were €4.4bn, five times higher than the equivalent period last year but down 6.6 per cent on the same period in 2019.

Shares in the London-listed company were down 0.2 per cent in early morning trading to 143.1p.

Despite the travel chaos, the company said it was “well on track” to deliver close to pre-pandemic levels of trading this summer, adding that booking data was “encouraging”. Group bookings for summer this year stood at 90 per cent of 2019 levels. In the UK, summer bookings were up 20 per cent, compared with 2019.

However, Tui said only demand for winter bookings from the UK market was at normal levels. Booking volumes in the UK were up 16 per cent compared with winter 2018.

Richard Clarke, an analyst at Bernstein, said Tui could struggle during a consumer downturn over winter. “I think the big concern with Tui is that they are a fully European discretionary consumer stock, and they have a lot of operations in markets that are going to be squeezed and where people are going to be facing a cost of living squeeze,” he said.

Ebel warned the cost of living crisis could hit bookings again. “On the other hand, Tui is in a segment where customers have more available income and we have seen in the crisis that this segment is booking very constantly.”