TUI responds to Thomas Cook collapse

TUI responds to Thomas Cook collapse

German travel and tourism company TUI AG (LON: TUI) issued a statement today, in response to what has been a strong start to the week’s trading for the Company, following the capitulation of its counterpart, Thomas Cook.

The Company reported ‘balanced results’, with demand shifting from Western to Eastern Mediterranean locations, and their Turkish destinations in particular seeing increased footfall.

TUI went on to say that it expects to see customer growth on the back of its acquisitions of Destination Management and Musement, and the launch of its new cruises; the Mein Schiff 2, Marella Explorer 2 and Hanseatic nature for Hapag-Lloyd Cruises. It also said that it hoped to expand the portfolio of its TUI Blue hotel portfolio from 10 to 100 by the end of 2020.

The Company added that its Winter Programme is currently in line with the prior year’s trading, and in response to Thomas Cook’s collapse, the Company’s shares bounced over 8% on Monday.

TUI AG comments

Speaking on the update, Chief Executive Friedrich Joussen, said,

“On Monday 23 September 2019, our competitor Thomas Cook UK Plc and associated UK entities entered into compulsory liquidation. TUI is preparing measures to support. Where TUI customers are booked on Thomas Cook Airlines flights and these are no longer operated, replacement flights will be offered. We are currently assessing the short term impact of Thomas Cook’s insolvency under the current circumstances, on the final week of our FY19 financial result.”

“Our vertically integrated business model proves to be resilient, even in this challenging market environment. Our Holiday Experiences business continues to deliver strong results. Meanwhile, ourMarkets & Airlines business faces a number of ongoing external challenges such as the grounding of the 737 MAX aircraft, airline overcapacities and continued Brexit uncertainty. The Summer 2019 season is however closing out in line with expectations and we therefore reiterate FY19 underlying EBITA guidance stated in our ad hoc announcement of March 2019 of approximately up to minus 26% compared with underlying EBITA rebased in FY18 of EUR1,177m.”

“These external challenges will continue in FY20 – therefore, we will focus on becoming more cost competitive in our Markets & Airlines business to protect and extend our market share where possible. Going forward, our two key digital strategic initiatives will deliver greater customer reach in new markets complementary to our existing markets, through our new GDN-OTA2 platform as well in our Destination Experiences markets through our Musement platform, driving further demand to our own Holiday Experiences businesses. TUI is well-positioned to become an integrated digital tourism platform business.”

Investor notes

After Monday’s rally, the Company’s shares continued to rally on Tuesday, up 7.83% or 70.60p to 972.00p per share 24/09/19 15:44 BST. Shore Capital analysts reiterated their ‘Buy’ stance on TUI AG stock.

Elsewhere in travel and aviation, there have been updates from; Thomas Cook (LON: TCP), Fastjet PLC (LON: FJET), John Menzies plc (LON: MNZS), Wizz Air (LON: WIZZ) and  Ryanair Holdings Plc (LON:RYA).