TUI shares were shining on Wednesday morning after the travel group revealed robust trading in the third quarter as holidaymakers scrambled to book overseas breaks despite the cost of living crisis.
Shares had given up gains and were trading negatively in the early afternoon.
TUI continued its rebound from the pandemic last quarter, with 5.5 million customers using the company for their holidays, an increase 9% versus the prior year. It also presents 95% of pre-pandemic customer levels in Q3 2019 on a comparable basis. TUI recorded an average load factor of 93% compared to 92% in Q3 2022.
Group revenue hit €5.3 billion the last quarter, up 19% compared to Q3 2022 thanks to higher volumes and prices. This performance brought Group revenue to 11% above pre-pandemic levels in Q3 2019, driven by improved pricing.
TUI’S Group underlying EBIT was €169.4 million, a strong improvement of €196.5 million and €122 million excluding prior year flight disruption costs.
“Demand is looking brighter as travel rebounds, and flight capacity at the start of the important summer season has been firing on all cylinders. A total of 5.5m customers enjoyed a holiday with TUI in the quarter, up by 9% on the prior year. And supported by these higher volumes of sun-seekers as well as price hikes, revenues soared upwards at double-digit rates,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.
“TUI doesn’t just run flights, it has a much wider package holiday business. In some ways that makes it more defensive – there’s more to offer and plenty of cross-selling opportunities. But the drains on cash when you have planes, huge hotels and even cruise ships to fill are enormous. So returning to pre-pandemic levels is key and good progress is being made on this front.
“Debt levels have improved significantly over the year, helped by a recent €1.8bn rights issue as well as positive free cash flows. But standing at a mighty €2.2bn, the debt level’s still eye-watering compared to profits, meaning dividends are likely off the table for now.”