200 flights canceled
TUI is in the red with flight cancellations
08/10/2022 5:14 p.m
Flight cancellations cause high additional costs for the tourism group TUI. The sum amounts to 75 million euros. Without the extra effort, the company would have turned a profit again. But the travel giant is on course for recovery and expects a successful year as a whole.
Additional expenses due to flight cancellations in Great Britain cost the tourism group TUI its first operating profit after the Corona crisis. The company announced that around 200 cancellations, mainly at Manchester Airport, had cost 75 million euros in the past quarter. “Without these additional costs, adjusted Group EBIT would have been EUR 48 million, making it the first profitable quarter since the pandemic began.”
Less than one percent of the summer program fell victim to the chaos at airports due to the acute shortage of staff. TUI itself would have brought 96 percent of all guests to their holiday destinations on time or only slightly late. Hopefully the disruptions to airport operations are now over, said CFO Sebastian Ebel. The TUI manager will take over the management of the group at the end of September after long-time boss Fritz Joussen left early at his own request.
Not all problems have been solved, Joussen said, with a view to the high level of debt and the losses incurred as a result of travel restrictions during the pandemic. “But the crisis itself has been overcome, that was my concern.” Successor Ebel explained that the return to profitable growth is now the top priority. He is not aiming for strategic changes, the path already taken will be continued – with high-quality offers and the expansion of the activities platform Musement.
Positive EBIT for the full year
Overall, the travel giant sees itself as continuing to recover after the slump caused by the corona pandemic since 2020. “TUI’s summer travel season will be strong, with capacities almost at the pre-crisis level of 2019. We expect a significantly positive adjusted EBIT for the full year.” , said Ebel. The seasonally strongest quarter from July to September will be very positive in terms of earnings in all business areas, explained future CFO Matthias Kiep. Because after nine months there is still an operating loss of 630 million euros to be ironed out.
From April to June, TUI’s third business quarter, turnover with around five million customers was almost seven times as high as in the same period of the previous year at EUR 4.4 billion. In addition to the strong recovery in bookings, the 18 percent increase in prices also contributed to this. Because holidaymakers treated themselves to higher quality hotel services and longer stays. Before taxes and interest, there was a deficit of 27 million euros. The bottom line is that the company made a quarterly loss of 331 million euros. After nine months, the world’s largest travel group made a net loss of one billion euros on sales of 8.9 billion euros.
Against the background of higher inflation rates and fuel costs, the new TUI boss wants to increase prices in the coming years. There will be a moderate increase in hotel prices, Ebel announced. “This also leads to an increase in the price of the trip.” The tour operator is cautious when planning capacity in view of the possible effects of inflation on demand. However, consumers rarely go without holidays, although they may prefer closer travel destinations to more expensive long-distance routes.