TUI shares slid 1.4% to 141.3p in early morning trading on Wednesday, following a pre-tax loss of €27 million in Q3 2022 from a loss of €669.8 million in Q3 2021.
However, TUI reported a revenue growth to €4.4 billion in Q3 2022 against €649.7 year-on-year, linked to rising travel and tourism activity following the pandemic.
The travel company mentioned an operating profit of €48 million from a significant loss the last year.
“TUI has had what can only be described as a strong third quarter – crucially, forward bookings for the final dregs of the summer season are looking well placed,” said Hargreaves Lansdown equity analyst Sophie Lund-Yates.
“The drains on cash when you have both planes and hotels to fill are enormous, so this about-change couldn’t have come fast enough for the group.”
However, TUI reported additional costs of €75 million on the back of flight disruption caused by wider aviation sector chaos.
“The bottom line has hit some further turbulence thanks to hefty costs associated with airport disruption, but there’s little the group can do about wider aviation industry labour shortages,” said Lund-Yates.
TUI confirmed its summer was on-track to meet capacity close to pre-Covid levels.
However, the company noted a net debt of €3.3 billion, providing a substantial hurdle to tackle in the coming year.
“The group’s hauling around an eye-watering debt pile when looked at in comparison to earnings, and bringing that down is a priority,” said Lund-Yates.
“Looking ahead, TUI needs to be careful it gets the balance right between addressing liquidity risk while spending enough to keep its competitive edge.”
“A lot of holiday makers aren’t especially brand-loyal and simply want the best deal – a fickle client base in the current cost-of-living environment makes market-share growth potentially difficult.”
