European tour operator TUI beats profit expectations on summer travel bookings

By Joanna Plucinska, Ilona Wissenbach and Andrey Sychev

(Reuters) -Europe's largest tour operator TUI beat third-quarter operating profit expectations on Wednesday thanks to strong summer travel demand, a resurgence in packaged holidays and a boost from the bankruptcy of German rival FTI.

Travel firms and airlines had hoped this summer season would surpass pre-pandemic levels, despite economic uncertainty, delays in plane deliveries and rising jet fuel prices.

"Holidays are still highly prioritized by consumers," with summer bookings 6% ahead of last year, Chief Financial Officer Mathias Kiep said on a media call.

TUI posted 232 million euros ($254.92 million) in underlying earnings before interest and tax for the April-June quarter, up 37% from 169 million euros a year earlier. Analysts polled by LSEG had expected 217 million euros.

Shares were up 4.3% in early Frankfurt trading.

TUI confirmed guidance for a 25% increase in operating profit this year and 10% revenue growth, despite delivery delays from Boeing (NYSE:BA ) and costs associated with an outage at cybersecurity tech firm CrowdStrike (NASDAQ:CRWD ) last month.

The German group recently switched its listing from London to Frankfurt but maintains a large customer base in Britain and saw a boost from the insolvency of competitor FTI.

While demand has remained strong, some airlines' results in the quarter were impacted by rising costs associated with labour disruptions, maintenance, or weaker business bookings.

While budget carrier Ryanair had warned that ticket prices could drop as customers become more price-sensitive, TUI said bookings did not slow despite higher prices for its flights and packages, up 3% year-on-year.

TUI's resilience lies in its travel business. Travel agents have said that packaged holidays have made a comeback as inflation drives up hotel, sightseeing and restaurant prices.

Rival easyJet (LON:EZJ )'s holiday business has also been successful, bolstering the broader airline business.



TUI Chief Executive Sebastian Ebel said it was positioning itself further outside of Europe to bolster business, including in Latin America, the Caribbean and Asia, with a recent hotel opening in Vietnam.

($1 = 0.9101 euros)

Source: Investing.com