Half-year results

TUI and Thomas Cook bookings drop in Germany

Tough times for TUI boss Fritz Joussen (left) and Thomas Cook CEO Peter Fankhauser (right)
TUI, TC
Tough times for TUI boss Fritz Joussen (left) and Thomas Cook CEO Peter Fankhauser (right)

Europe’s two largest tour operators have both reported heavier half-year losses amid tough trading conditions and with lower sales in key source markets, including Germany.

TUI Group yesterday reported a 1.7% rise in turnover to €6.7 billion for the six months ending March 2019 but its seasonal loss increased to €300 million due to a mix of weaker trading and various one-off effects, including the grounding of B737 Max planes. The hotels business saw a drop in revenues and profits but the cruises business continued to grow healthily.

Its Markets & Airlines division, covering the group’s tour operators and airline activities, reported a 2.4% drop in customer numbers and a 2.2% fall in revenues in “a very challenging market environment”. TUI highlighted over-capacity to Spain, especially the Canary Islands, and a switch in demand to the Eastern Mediterranean, particularly Turkey, as key trends that impacted on half-year margins. The division’s seasonal loss increased to €497 million from the previous year’s €375 million.

TUI’s revenues in Central Europe (which it calls the ‘Central Region’) dropped by 6.7% to €934 million in the January – March 2019 quarter as customer numbers slumped by 8.1% to 976,000, the company’s half-year report showed. The seasonal loss (underlying EBITA) broadened slightly to €90.7 million. The second-quarter figures were a drag on the region’s half-year results, which ended with a 0.5% decline in revenue and a 2.3% fall in customer numbers but an 11.7% reduction in the seasonal loss.

TUI did not break out any specific figures for the Central Region, which covers Germany, Austria, Switzerland and Poland. But it noted that the drop in customer volumes “reflected a reduction in airline capacity in Germany, offset partly by a significant volume increase in Poland as we continue to drive growth in that market”. The improvement in half-year underlying earnings was driven primarily by Germany, where the previous year results had taken a €20 million hit from the bankruptcy of Niki as well as reduced overheads.

However, CEO Fritz Joussen remained upbeat, declaring: “TUI is on track, both strategically and operationally, and is well positioned. Our core businesses with our own hotels, cruises and destination experiences and activities remain strong and currently deliver around 70% of our earnings. TUI will emerge as a stronger, more efficient and more profitable group from the current consolidation of our sector in Europe. We will be among the winners, not among the losers.”

In contrast, Thomas Cook today unveiled a heavy half-year pre-tax loss of £1.45 billion, largely due to a one-off goodwill impairment of £1.1 billion in its UK business, relating to the 2007 merger with MyTravel. The seasonal operating loss excluding this impairment increased slightly to £282 million with revenues down slightly to just over £3 billion.

Europe’s second-largest tourism group currently has a 12% drop in tour operator bookings, albeit following capacity cuts and with a 2% rise in average prices. Cook reported strong demand for Turkey, Egypt and Tunisia but lower bookings for Spanish islands following capacity reductions.

CEO Peter Fankauser said: “The first six months of this year have been characterised by an uncertain consumer environment across all our markets. The prolonged heatwave last summer and high prices in the Canaries reduced customer demand for winter sun, particularly in the Nordic region, while there is now little doubt that the Brexit process has led many UK customers to delay their holiday plans for this summer.”

In Continental Europe, Cook has lower summer bookings across all markets and below its capacity reductions, “primarily reflecting a weaker consumer environment in Germany, in particular. The decline is being driven by reduced demand for the Spanish Islands and Greece, partially offset by growth to Turkey and Tunisia”.  

The region’s half-year revenues dropped slightly to £1.2 billion and seasonal underlying EBIT loss increased by £19 million to £64 million due to lower margins to long-haul destinations (partly caused by an unfavourable hedging position for the US Dollar) and strong market competition, particularly in Central Europe and Netherlands, whilst France and Russia saw revenue grow year-on-year by 7% and 28% respectively.

Thomas Cook Group Airline, which is up for sale, has a 6% overall drop in summer bookings but a 9% rise in third-party sales, including higher Condor bookings to external clients.

Fankhauser confirmed Thomas Cook had received several bids for the airline business, both as a whole and for parts. “As we assess these bids, we will consider all options to enhance value to shareholders and intensify our strategic focus,” he commented. Lufthansa CEO Carsten Spohr disclosed last week that the German airline had made a bid for Condor and the Thomas Cook Airlines as a whole.

Fachmedien und Mittelstand Digital Logo
Nutzungsbasierte Onlinewerbung
stats