Tour operator TUI (TUI) is confident it can deliver at least 10% growth in underlying earnings before interest, tax and amortisation. This is reassuring given the summer heatwave recently led rival Thomas Cook (TCG) to issue a profit warning.
Shares in the tour operator advanced 1.5% to £14.59 on the news.
TUI says the hot weather in Northern Europe over the summer has limited its ability to outperform, but trading remains robust.
Looking ahead, volumes are up 2% for the winter season with bookings in most markets higher than last year.
One exception is the Nordics as the hot summer has deterred people planning their getaways, causing selling prices to decline 1%.
Resurgence in demand for destinations in Turkey, North Africa and Greece, as well as new openings in South East Asia and the Caribbean have boosted sales by 4%.
In the cruise division, the launches of TUI Cruises Mein Schiff 1 and Marella Explorer are off to a good start with a strong yield performance.
WHY WAS TUI MORE RESILIENT?
AJ Bell investment director Russ Mould says: 'Travel operator TUI comfortably wins the battle with its main UK-listed peer Thomas Cook by guiding for results to be in line with expectations despite the summer heatwave enjoyed by its major markets acting as a deterrent for some people to book overseas breaks.
'Today's announcement raises questions about whether Thomas Cook, which warned on profit earlier this week, struggled with bookings simply because potential holidaymakers were sunning themselves at home or if there are more fundamental problems facing the business.
'The nature of TUI's tour operating business, which is less exposed to the late booking market where Thomas Cook suffered, and its greater exposure to the high growth and high margin cruise ship business have helped the former perform better.'
Shore Capital’s Greg Johnson is encouraged by TUI’s performance achieved despite the hot weather and airline strikes.
The analyst forecasts an 11% rise in earnings despite an expected €70m drag from exposure to the weak Turkish Lira.
