Tui Group has upheld full-year guidance for underlying earnings to grow ‘significantly’ as it continues to benefit from a rebound in travel demand.
The German travel giant revealed that bookings for the upcoming summer season are up 13 per cent from the prior year and 6 per cent higher than pre-pandemic levels, supported by higher prices and stronger passenger demand.
It follows a bumper winter programme for the company, with its bookings up by a third on the previous year’s volumes, and Cape Verde, Turkey, and Egypt among the most popular destinations.
Rebound: Tui revealed that bookings for the upcoming summer season are up 13 per cent from the prior year and 6 per cent higher than pre-pandemic levels
Travel businesses have seen a resurgence in trade after experiencing unprecedented disruption and financial pain during 2020 and 2021 from the imposition of Covid-related curbs.
For the three months ending March, Tui’s revenues jumped by about €1billion to €3.15billion amid soaring occupancy rates in its hotels and cruise travel businesses.
Of the 2.4 million people who took a holiday with the firm during the quarter, Mexico and the Caribbean were particularly popular destinations, with occupancy rates at Tui’s hotels in both territories exceeding 90 per cent.
But despite the exceptional recovery in trade, Tui still recorded a €395.3million operating loss during the first half of the financial year.
Its net debt at the end of March also totalled €4.2billion, a 6.6 per cent increase on the same time in 2022, partly due to major cash outflows resulting from weaker December bookings and soaring advance payments to suppliers.
However, the company expects to slash this figure by €1.8billion by the end of September thanks to a recent discounted rights issue that has enabled it to fully repay aid borrowed from the German government during the pandemic.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: ‘Liquidity risk remains at the forefront of investors’ minds. The airline sector is one marred by consolidation during tough times too, and weaker links are at more risk of facing difficulty.
‘Tui’s strong brand and more achievable price points do offer pillars of strength. The main thing to monitor from here will be the reliability of demand once this summer is out the way.
‘A lot of this will be outside TUI’s control, but the powers-that-be will certainly be hoping for a soft economic landing.’
The firm’s results follow British Airways owner IAG, EasyJet and Jet2 all raising their profit forecasts in recent weeks amid a bounce back in summer bookings even though Britons have increasingly been impacted by a cost-of-living crisis.
Tui shares were 4.8 per cent down at 535.2p on Wednesday morning, although their value has still grown by approximately 45 per cent since the start of the year.
