TUI’s No. 1 Shareholder Mordashov Pledges Backing as Others ExitRichard Weiss
TUI AG’s No. 1 shareholder Alexey Mordashov said he won’t be selling his stake following the exit of other investors in Europe’s largest tour operator, while urging the company to simplify its portfolio of holiday brands.
Mordashov, who runs Severstal OAO, Russia’s second-biggest steelmaker, said on TUI’s internal website that Chief Executive Officer Friedrich Joussen is “on the right track” at a company that posted net income of just 4.3 million euros ($5.9 million) last fiscal year on sales of 18.5 billion euros.
The commitment comes after Norwegian billionaire John Fredriksen sold a near 20 percent stake in February when he was TUI’s No. 2 investor, with Morocco-based Caisse de Depots et de Gestion last month exiting the remainder of a 5 percent holding.
“The transformation is making visible progress,” Mordashov is quoted as saying on Hanover-based TUI’s intranet portal. “We are very satisfied with our stake and the management. The question of a potential exit does not arise.”
TUI has gained 44 percent since Joussen took over in February 2013, versus a 26 percent advance for the six-member Bloomberg Europe 500 Travel & Leisure Index. The CEO has promised to cut costs, revive unprofitable cruise operations and refine hotel brands in an effort to deliver 1 billion euros of operating profit in the 12 months ending Sept. 30, 2015.
A more focused branding portfolio is “crucial” and TUI must act to more strongly differentiate its services, Mordashov said in his posting.
The billionaire, who began investing in TUI in 2007 and owns just under 25 percent of its stock, according to data compiled by Bloomberg, said a growing middle class will spur global demand for travel and that owning hotels and cruise ships gives TUI an edge over online rivals.
A venture established in 2009 between Mordashov’s S-Group Travel Holding and TUI Travel Plc, Europe’s top tour operator, with the aim of tapping travel from Russia and Ukraine has failed to turn the TUI unit’s emerging-markets arm profitable.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.