TUI reports a turbulent quarter as underlying losses increase

Summer heatwave, overcapacity in Spain and Sterling weakness all seem to factor into the disappointing results.

Article updated: 12 February 2019 12:00pm Author: Ian Forrest

  • Problems at the Group’s markets and airlines divisions carried over into summer booking period.
  • Headwinds around Brexit cause company to expect earnings to remain flat for remainder of the year.
  • With so much uncertainty and an increasingly volatile share price we are placing our ‘Buy’ recommendation under review.

Tui reports a turbulent quarter

TUI reported a sharp drop in first quarter earnings today stating problems at its markets and airlines division extended beyond the winter and into the summer bookings period. Turnover rose 4.7% to €3.7bn but underlying losses increased from €36.7m to €83.6m. The Group’s issues continue to revolve around the impact from the 2018 heatwave, the overcapacity in Spain and the weakness of Sterling.

Despite this, the sunshine is breaking through the clouds for the company’s cruises, with three new ships due to launch later this year, and holiday experiences which account for 70% of earnings. However, the company continues to expect earnings this year to remain flat and is concerned its airlines will continue to have access to EU airspace after Brexit.

The market reacted to the ongoing problems by sending the shares down a further 5% in early trading – this follows on from the sharp drop seen last week when the company issued a profit warning. While there are clearly some parts of the business seeing good growth the fact that markets and airlines are continuing to suffer from a range of issues is a concern and it may take some time to see any improvement. With so much uncertainty and an increasingly volatile share price we are placing our Buy recommendation under review.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to To understand how our Investment research team arrive at their views please read our Investment Research Policy.

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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.