Brexit turbulence sees TUI report staggering €287mn loss

Further headaches to come as Boeing planes are grounded, which will impact full year profits.

Article updated: 15 May 2019 12:00pm Author: Helal Miah

  • Company warns full year profits will be impacted without a resolution to the grounding of Boeing 737 MAX planes.
  • Share price declines across the sector provides attractive valuations with very good yields including TUI at just over 7%.
  • We continue to recommend the share as a ‘hold’ for investors willing to accept a medium level of risk.

In a traditionally weaker period for the group, TUI reported half year sale up by 1.7% to €6.7bn. However, losses also rose to €287mn as the company attributes this to headwinds being felt from continued uncertainty over Brexit as travellers delay or put off holidays to the Eurozone. Sadly the news doesn’t get much better, as the grounding of Boeing 737 MAX planes will pose another hurdle and management reiterated their warning that full year profits will be impacted without a quick resolution.

In recent years British and European travellers have shown their resilience to many uncertain economic conditions and terrorism issues in some popular destinations. However, since last summer, some of this resilience has waned given the political outlook. Shares in the sector have also been heavily impacted by exceptionally good weather leading to many more people going on ‘staycations’. Should we have more normal weather conditions this summer though, it is likely that we may see a bounce back in demand for overseas holidays.

Our View on TUI - Hold

Given the share price declines, there are some attractive valuations in the sector with very good yields, including TUI at just over 7%, but this maybe for the brave investors who is willing to wade through the many challenges that TUI and it peers will face. We continue to recommend the share as a ‘hold’ for investors willing to accept a medium level of risk.

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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 www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Helal Miah portrait photo
Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment.