TOUR operator TUI, the UK’s largest, has declared it is on track to deliver a summer close to 2019 as it reported its first broadly break-even quarter since the pandemic took hold and posted underlying earnings of €48 million compared with heavy losses last year.

Despite taking a €75m hit caused by flight disruption across Europe, the German-based travel group, which operates airlines, tour operators, travel agencies, hotels and cruise liners, saw third-quarter revenue rise from €649.7m to €4.4 billion, reflecting increased travel activity following the pandemic.

However, it reported an underlying operating loss of €27m for the three months to June 30.

Warning that air travel disruption and the cost-of-living crisis would impact on its fourth quarter results, Tui pointed to strong summer bookings for the third quarter at 90 per cent of 2019 levels, rising to 93% in July and August as people reserve hotels at short notice.

Average selling prices were 18% ahead of three years ago.

Incoming chief executive Sebastian Ebel said: “Our business performed well in the third quarter despite the operational challenges in the European tourism sector.

“This shows the robustness of our integrated business model, the strength of the TUI brand and the continued high demand for holidays.

“We continue to expect a strong travel summer 2022 with capacity close to pre-crisis.”

Noting that “people want to travel and holidays continue to top the list of planned spending”, Mr Ebel added: “Although the entire European airline sector continues to face challenges, we have successfully ramped up our business with a significant increase in demand and achieved a good third quarter. This shows once again that our integrated business model is robust.”

But analysts cautioned that the “chaos at airports” will remain an issue.

Julie Palmer, partner at Begbies Traynor, said: “We might want to get away to the beach but chaos at airports is making that harder, no matter the strong demand from holidaymakers or the extra capacity TUI lays on.

“Average spend by holidaymakers is up almost a fifth on pre-Covid levels, showing the desire for a decent foreign holiday – even in the face of higher costs as the war in Ukraine keeps jet fuel prices sky high.

“With analysts predicting annual energy bills for typical UK households hitting £4,200 from January – equal to the average spend for [a] family of four to take two weeks in the sun – a holiday could soon be way down the list of priorities for many British families.”

At Hargreaves Lansdown, equity analyst Sophie Lund-Yates warned that many holidaymakers “aren’t especially brand-loyal and simply want the best deal”, adding: “A fickle client base in in the current cost-of-living environment makes market-share growth potentially difficult.”

Shares closed up at 145.3p.