TUI Withstands Turkey Shock as Full-Year Earnings Edge Higherby
Summer sales, customer numbers rose even amid Turkey turmoil
Tourism company sees operating profit rising as much as 13%
TUI AG, Europe’s largest tour operator, said full-year earnings will probably beat its forecast after the company managed to keep its hotels and cruise ships full this summer even with a shift in business from the eastern to western Mediterranean prompted by terrorism attacks in Turkey.
Underlying earnings before interest, taxes and amortization in the year ending Sept. 30 will rise by 12 percent to 13 percent at constant currencies, Hanover, Germany-based TUI said Wednesday in a statement. That compares with an earlier prediction of at least 10 percent growth. Sales and customer numbers from its source markets rose 1 percent as prices remained flat. Excluding travel to Turkish destinations, bookings from those markets advanced 7 percent.
“The 2016 summer season was a particularly challenging time for tourism companies and airlines,” Chief Executive Officer Fritz Joussen said in the statement. “We’re very strong in the Mediterranean. We’re investing in the Caribbean and Southeast Asia and in the expansion of our cruise ship fleet. This diversity makes our risks manageable.”
Tour operators rushed to shift airline seats and hotel reservations away from Turkey early this year after terrorist attacks and a failed coup made the country less attractive for vacationers, following similar incidents involving popular tourist sites in Tunisia and Egypt. TUI’s performance contrasts with smaller U.K. rival Thomas Cook Group Plc, which said Tuesday that its prices and bookings in summer each fell 4 percent, following a profit- forecast cut in July.
TUI shares rose as much as 4.1 percent to 1,130 pence, the highest intraday price since Feb. 8, and were up 3 percent as of 8:50 a.m. in London. That pared the stock’s decline this year to 7.7 percent, valuing the company at 6.56 billion pounds ($8.53 billion).
The travel operator is also adding wide-body aircraft to its fleet as demand for long-haul vacations remains strong, especially in the U.K. That has helped bookings for the coming winter season rise 5 percent, the company said.