The cost-of-living crisis has failed to deter sun-seekers from prioritising travel and experiences as Tui returned to profitability in the key April to June period of this year.
The tour operator has reported an underlying pre-tax profit of €169.4m (£146m) for the quarter, almost €197m higher than the same period a year earlier. A 9% increase in passenger numbers to 5.5 million took bookings close to pre-pandemic levels as Tui carried 95% as many passengers as it did in the same quarter in 2019.
While the €25m (£21.6m) hit from July’s wildfires in Rhodes will be reflected in the group’s full-year results, Tui looks to be on course for recovery from the Covid pandemic.
The group has a wide package holiday business that spans well beyond simply running flights, giving it more to offer and plenty of cross-selling opportunities. Chief executive Sebastian Ebel has also indicated that Tui is set to broaden the number of destinations it offers to mitigate against climate change, even though the Mediterranean remains one of the top places for holidaymakers.
READ MORE: Rhodes wildfires cost Tui €25m as 8,000 customers evacuated
Earlier this week the company acquired the all-inclusive Emerald Zanzibar Resort & Spa in Tanzania as part of a strategy to expand its in-house portfolio of hotels. The deal was secured via a new global hotel fund that has been raising capital since being initiated last year in conjunction with a Luxembourg-based investment firm.
In total the group’s hotel portfolio has expanded by 32 properties in the current financial year, some being operated under the Tui Blue brand, as it seeks “profitable growth”.
But the drains on cash with planes, huge hotels and even cruise ships to fill are enormous. Debt levels at Tui have improved significantly over the year, helped by a recent €1.8bn rights issue as well as positive free cash flows, but at €2.2 billion the debt level is still eye-watering compared to profits.
This is likely why the shares are trading lower this afternoon despite the rebound in profits in the latest quarter. It could be a long haul for investors keen to see the reinstatement of dividend payments that have been suspended since the onset of Covid in 2020.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here