TUI Misses 3Q Forecasts Due to Travel Disruption; Will Seek Compensation From Airports — Update

By Anthony O. Goriainoff

TUI AG missed third-quarter earnings forecasts on air traffic disruption from ground staff shortages, saying that it would seek compensation from the affected airports.
Incoming Chief Executive Sebastian Ebel said the company would be asking for compensation from the airports–citing Amsterdam’s Schiphol Airport as its largest source of disruption–and that although he couldn’t give a specific figure, it should be significant.

The London-listed, German travel operator reported an underlying loss before interest and tax for the quarter ended June 30 of 27 million euros ($27.6 million) compared with a loss of EUR669.8 million the year before and a forecast by UBS analyst Cristian Nedelcu for a EUR75 million profit.
TUI booked a EUR75 million charge in its accounts related to the air traffic disruptions. The European travel sector has been hit over recent months by a shortage of staff after airlines and airports laid off employees during the pandemic crisis, and strikes among ground crew at some major airports.
Shares at 0850 GMT were up 1.10 pence, or 0.8%, at 144.50 pence having fallen to a low of 137.25 pence earlier in the session.
Despite the extra charge, TUI said that it expects to return to positive underlying EBIT for the year as a whole as it benefits from a return to travel after the lifting of coronavirus-related restrictions.
The company said that although it wasn’t dismissing a future equity raise, its focus at the moment was getting back to operational recovery and profitability. It added that it will continue to look at all opportunities that make sense and have a structured dialogue with shareholders as well as the board.
TUI said that it expected a normal winter season which wouldn’t be “too dissimilar to winter 2019,” and that although inflation was a concern customers already had a travel budget set aside. Mr. Ebel said the cost of living could affect bookings and that because of this he expected a shift to short-haul travel, from long-haul. He said customers could leave the Caribbean and move instead to places like Egypt, adding that as travelers were still booking close to the departure date he was cautious about capacity planning for the winter season.
TUI said it carried 5.1 million passengers over the quarter, generating revenue of EUR4.43 billion compared with EUR649.7 million in the year-prior period. One analyst polled by FactSet had a revenue estimate of EUR4.30 billion.
Excluding exceptional and other one-off charges the company made a loss before interest and taxes of EUR42.5 million for the quarter ended June 30 compared with a loss of EUR748.0 million for the third quarter of fiscal 2021.
TUI said that the booking momentum continued to be encouraging with average prices being significantly higher than in 2019.
The company said that bookings were at 90% of the levels seen in 2019, with 11.5 million customers booked for summer 2022. It added that bookings for July and August were at 94% of the level seen in summer 2019, and that it expects to reach almost the same level of bookings in summer 2022 as in 2019.
“Our business performed well in the third quarter – despite the operational challenges in the European tourism sector,” Mr. Ebel said.
“We continue to expect a strong travel summer 2022 with capacity close to pre-crisis levels and significantly positive underlying EBIT for the full year.”
Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com