TUI third-quarter earnings’ plunge
TUI’s earnings have almost halved over the past three months compared with the same period last year, which the operator blamed on the grounding of the 737 MAX.
The travel giant made €100.9 million euros in the third quarter of this year, down 46% on the €186.8 million earned during the third quarter of 2018.
In a trading update released this morning, TUI said the grounding of the 737 MAX worldwide, following two fatal crashes in Indonesia and Ethiopia, had cost it €144 million so far.
It said the cost for the full financial year would be about €300 million as it has been forced to secure replacement aircraft for the summer season.
Brexit uncertainty and last year’s heatwave also had a negative impact on third-quarter earnings, said TUI, as customers delayed booking holidays this summer. The operator admitted that it had also been affected by overcapacity to Spain.
Summer bookings at the start of August were up 1% year on year and average prices were also up 1%.
TUI Group turnover during the three-month period was up 3.7% year on year to €4.75 billion.
During today’s announcement, TUI said it planned to speed up the integration of its European tour operators to make it more competitive. It added: “Efficiency enhancement and cost reduction in TUI’s tour operators will be accelerated.”
CEO Fritz Joussen said: “Despite the challenging environment in 2019 to date, our underlying business remains robust, and we expect to deliver a solid performance in 2019, which, however, will not match the prior year’s result, as expected due to the grounding of the 737 MAX.
“Hotels & Resorts will benefit from our diversified portfolio and Cruises will deliver strong growth.
“We have significantly reduced our dependence on traditional tour operators over the past five years. The transformation of our Group will continue.
“The tour operator businesses in our European markets will be brought together faster and more effectively. We are consistently pursuing our digital transformation to develop TUI into a global platform organisation.
“The strength of our globally unified brand and direct access to our customer base, already comprising more than 21 million customers, offers great potential for the future.”
TUI confirmed guidance issued in March that its underlying earnings for the full year will be around 26% down on 2018’s earnings of €1.177 billion.