11th May 2022 18:16
(Alliance News) - Tui AG expects a long-awaited return to profit this year amid an optimistic outlook for travel, though demand could be hindered as many consumers struggle with the rising cost of bills and expenses.
Tui on Wednesday posted a sharp first half revenue jump, with the Anglo-German holiday operator's fortunes resembling pre-Covid times.
The stock closed up 5.8% at 229.40 pence on Wednesday, among the best performers in the FTSE 250.
The leisure, travel and tourism company said revenue in the first half ended March 31 soared to EUR4.50 billion from EUR716.3 million a year earlier. In the second quarter alone, revenue jumped to EUR2.13 billion from EUR248.1 million.
Despite strong year-on-year rises, both revenue figures fell short of what Tui achieved two years earlier, largely before the impact of Covid-19. Revenue in the first half of financial 2020 was EUR6.59 billion, while in the second quarter, it achieved revenue of EUR2.79 billion.
The Hanover, Germany-based saw its pretax loss narrow in the first half of financial 2022. Tui posted a pretax loss of EUR871.0 million, slimmed from EUR1.54 billion a year prior. In the second quarter, Tui's pretax loss narrowed to EUR466.5 million from EUR736.9 million.
Tui also trimmed its first half underlying loss before interest and tax to EUR603.5 million from EUR1.31 billion a year prior.
The improved top and bottom lines came despite a "more subdued January and February post Omicron restrictions".
Tui said it operated 71% of its financial 2019 capacity during the second quarter.
All in all, the outlook for Tui is promising. It expects to return to "significantly positive" underlying earnings before interest and tax for the current financial year.
The Anglo-German company's optimism comes amid worries rising living costs might curb soaring demand for travel.
AJ Bell's Russ Mould commented: "While bookings in general are in recovery mode, there remains a big risk that momentum won't be sustained given the pressures on consumers from the rising cost of living. We've already seen reports that big ticket retail items like sofa and electronic goods are suffering, so it makes sense to also suggest that holiday plans might be delayed once again if the costs keep going up.
"For those who haven't already booked their summer break, the longer they leave it, the higher the potential not to go away at all given the direction of travel for inflation. TUI argues there is pent-up demand for a summer holiday and that is certainly true. However, some families may not feel comfortable digging into their savings to fund a week on the beach when they can see their monthly bills going up by a large amount."
By Arvind Bhunjun; [email protected]
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