- Bookings not back to pre-pandemic levels
- S&P upgrade to positive outlook
- 2.4 million customers booked holidays in Q2
Shares in travel operator TUI (TUI) were down 3% to 545p in morning trading as the company reported a seasonal loss of €242.4 million for the six months ending 31 March 2023 compared to a loss of €329.9 million in the same period last year.
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Group revenue, however, increased by 48% to €3.2 billion - above pre-pandemic levels - compared to €2.1 billion in the same period last year, reflecting ‘the strength of demand for our products in a restriction free travel environment’ said the company.
Russ Mould, investment director at AJ Bell, said: ‘A negative reaction to TUI’s first-half results may be the fact summer bookings still have not quite recovered to pre-pandemic levels.
‘They may not be far off, but investors have had to wait some time for a proper recovery, and they backed the company in a big fundraise recently so patience may be starting to wear a bit thin.’
‘Competitive pressures also remain, with Jet2 taking TUI’s mantle as the biggest package holiday firm in the UK this year, and there is definitely no room for complacency.’
S&P UPGRADE ON BALANCE SHEET STRENGTH
TUI also announced the successful completion of the €1.8 billion capital increase, which allows the FTSE 250 company to repay the German government in full for the state aid it received at the start of the Covid pandemic.
Back in March, the Anglo-German travel and tour operator said it would significantly reduce its credit facility with KfW from €2.1 to €1.1 billion, which it has now done. As a result, US ratings agency S&P has upgraded TUI’s credit rating to B with a positive outlook.
STRONG BOOKING TREND CONTINUES
The company said there was ‘strong booking momentum’ during the first half of the year ‘continuing into the summer seasons’.
TUI said 2.4 million customers booked a holiday in the second quarter, an increase of 600,000 customers compared to the same period last year and an increase of 88% on the second quarter of 2019 on a like-for-like basis.
As a result, the average load factor for the second quarter was 93% compared to 85% in the second quarter last year.
A total of 12.9 million bookings have been taken across the winter and summer seasons (up to 30 April 2023), with 4.2 million bookings added since its first quarter interim report.
TUI said: ‘Bookings for summer 2023 are significantly up at 13% on prior year accompanied by higher average selling prices (ASPs).
‘Summer 2023 volumes in the last six weeks remains strong and are ahead of 2019 levels at 6% accompanied by higher ASPs emphasising the strength of customer demand and underlining the popularity of our product offering.
‘In the UK, which is currently 64% sold, bookings are in line with the prior season and up 10% versus pre-pandemic levels again accompanied by higher ASPs.’
The company added Greece, Spain and Turkey continue to be popular summer destinations with its customers, while Egypt and Cape Verde were proving popular for winter bookings.
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