After the summer travel boom, TUI is optimistic for 2023

Frankfurt, December 14 – After a successful summer, travel group TUI is counting on continued strong demand next year. The number of customers could almost reach the pre-crisis level of 21 million in 2023, new TUI boss Sebastian Ebel said on Wednesday. In the 2022 financial year, which ended at the end of September, the world leader in the package travel market had 16.7 million visitors, as obstacles to corona travel were lifted in the summer. “We also expect a strong and good 2023, but we are very aware of the external market factors.” The consequences of the Ukrainian war, the corona pandemic, inflation and high energy prices as well as fluctuations in exchange rates are taken into account in the forecast. Due to the uncertainty, it is first of all approximate: strong increase in sales and significantly higher operating profit.

“TUI is back on track,” said Sophie Lund-Yates, an analyst at UK wealth manager Hargreaves Lansdown. However, the rising cost of living makes it impossible to estimate demand. “Short sunny breaks are currently anything but the top priority for TUI’s top customers.”

OFFERS FOR “TRAVELISTS”

The great desire to travel in the summer allowed TUI to achieve a full-year operating profit for the first time. Adjusted operating income amounted to 409 million euros. The loss narrowed to 212 million euros after 2.5 billion euros the previous year. At 16.55 billion euros, sales were nearly four times higher than a year earlier as pandemic travel restrictions hampered package holidays and cruises. TUI saved the summer quarter from July to September, in which only a billion euro pre-tax profit was made. The number of guests during the three summer months reached 7.6 million, or 93% of the level before the 2019 crisis. Prices for trips were on average 30% higher than the previous year and should continue to increase.

“Tourism remains an attractive long-term growth sector,” Ebel said. The formula for profitable growth of the world’s largest tour operator is: “New products, additional customers, more market share.” The package travel giant wants to grow its business with personalized round-trip trips. Via an Internet portal and later via an app, customers can create trips with flights, hotels and rental cars via TUI and modify them if necessary. This is intended to appeal to older cultural travelers or young adventurous vacationers, the “Travelistas”. TUI Musement, the platform for excursions, museum tickets and events, will steal market share from its powerful European competitor “GetyourGuide”.

NEW CAPITAL INCREASE

The group, which was saved by the state from the collapse of the Corona crisis, has reduced its debt by 30% to 3.4 billion euros net and again has more liquidity to get through the winter . In order to get rid of the financial abyss of the state, TUI must tap the capital market for the fourth time, as the group announced on Tuesday evening. The stock, which is listed in London and Frankfurt, fell as much as eight percent.

The capital increase will be between 1.6 and 1.8 billion euros, explained financial director Mathias Kiep. TUI intends to use the money to repay outstanding federal government silent participation and an optional bond plus interest. According to Kiep, this alone costs up to 960 million euros. In addition, TUI will probably have to tap the credit line of the state bank KfW for the first time with 800 to 900 million euros to get through the winter. To be able to issue new shares, TUI must first create one out of ten shares. Shareholders must give their consent at the annual general meeting on February 14.

After the summer travel boom, TUI is optimistic for 2023

Source: Reuters

Symbolic photo: Image by Simon Berger on Pixabay

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