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Tui ‘resilient’ in tough market as it assesses impact of Thomas Cook collapse

Business | Published:

The group said it was offering replacement flights to Tui customers who had booked on Thomas Cook Airlines.

Tui update

Holiday giant Tui has said it is assessing the impact of rival Thomas Cook’s collapse on its results and “preparing measures” to support its affected customers.

The group said it was offering replacement flights to Tui customers who had booked on Thomas Cook Airlines.

It is currently assessing the impact of these costs on the final week of its full-year results to September 30.

Tui said in a statement on Monday that it has had to cancel all Tui and First Choice holiday bookings featuring Thomas Cook flights for any customers due to travel between September 23 and October 31.

But it is looking to find alternative holidays where possible for affected customers.

In its full-year trading update, Tui chief executive Friedrich Joussen insisted its business model was proving “resilient” in challenging market conditions.

But while its summer season had closed in line with expectations, the group said winter was showing the impact of a “weaker demand environment” with bookings down.

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Tui warned it expects difficult trading conditions to continue into the new financial year.

The firm has cautioned over Brexit uncertainty hitting demand, competition between airlines and the previously-flagged hit from the grounding of Boeing’s 737 Max 8 aeroplane.

The group continues to see full-year earnings tumbling by up to 26%, in line with the profit warning it made in March.

A holiday flight
The firm expects difficult trading conditions to continue into the new financial year (Steve Parsons/PA)

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Mr Joussen said: “These external challenges will continue in full-year 2019-20 – therefore, we will focus on becoming more cost competitive in our markets and airlines business to protect and extend our market share where possible.”

Despite the tougher conditions for tour operators, shares in Tui jumped 60.8p to 901.4p on Monday as investors saw it benefiting from Thomas Cook’s demise and the prospect of a market share boost.

Tui’s trading update showed it has sold around one third of its winter 2019-20 program, broadly in line with the year before.

The group said bookings were down in line with the company’s move to cut capacity by 2%, though the average selling price is up 4% year-on-year.

It said the markets and airlines business has been stronger since its last update in mid August, which will see bookings hold firm on a year earlier and prices up around 1% as it benefits from a return to growth in destinations such as Turkey and North Africa.

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