TUI shares were weaker on Wednesday after the travel operator released 2022 full year results which demonstrated a material bounce back from the subdued activity during the pandemic.
Revenue more than doubled to €7.6bn and EBIT increased €1.1bn as holidaymakers took the first unrestricted opportunity since the start of the pandemic to get away.
“TUI is back on track, as pent-up travel demand and a return to more normal travel patterns helped jet-fuel profits in the fourth quarter,” said Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown.
“The number of passengers in the core Markets & Airlines business doubled – with the per-seat margin benefit shining through in the numbers. Demand for winter bookings is also looking bright which means all-in-all, TUI is doing well.”
Despite the solid set of numbers for 2022 and some encouraging signs for 2023, TUI shares were 6% weaker at the time of writing.
The travel company has rallied markedly since their October lows but are still down 40% in 2022. Travel disruption and concerns about the cost of living crisis have rocked investor sentiment around travel companies this year. Analysts highlighted the uncertainty around the ability of holidaymakers to afford higher priced holiday next year as a reason to be cautious on TUI shares.
“In 2022 holidaymakers have been willing to pay what it takes to get away for the first time in what feels like an age. However, if prices move too high then affordability becomes an issue,” said AJ Bell investment director Russ Mould.
“This could be a key test for TUI in 2023 and, given people have shifted to booking their holiday at shorter notice to avoid the risk of being caught off guard by disruption, the company has limited visibility on its future business.”