German Tour operator Tui has predicted £21million in wildfire costs for 2023, which will dent the group’s underlying earnings before interest and tax of £145million for the three months to the end of June.
A dramatic improvement on the loss of £23.3million in the same period last year, Tui has posted its first post-pandemic quarterly profit on the back of unbridled travel demand.
Despite the financial impact of recent wildfires, Tui’s revenue was up by a fifth year-on-year to £4.6billion.
The firm cited cancellations, lost margin, customer compensation, welfare costs and repatriation flights as contributing to a £21million cost to the full year 2023 results.
Tui shares were up 3.4 per cent to 601p early on Wednesday.
PATui's chief Executive, Sebastian Ebel, said: “The heatwave in Northern Europe in June and the wildfires in Southern Europe have only dampened temporarily the previously strong development.”
He added: “We are investing today to continue to significantly grow profitably in the future.”
With Europe’s post-pandemic travel boom showing no signs of slowing, Tui have forecast summer holiday bookings to be 6 per cent higher than last year.
The group has said its 2023 summer capacity was “close to normalised Summer 2019 levels,” and are predicting similarly positive developments in the winter.
Smoke rises from a wildfire on the island of Rhodes, Greece, July 23, 2023ReutersTui said: “Bookings for Winter 2023/24 are at a very early stage but the season has started promisingly across our markets.
“As usual the UK programme is most advanced at 33 per cent sold. Bookings here are up 7 per cent compared to Winter 2022/23.”
Capitalising on increased underlying earnings and revenue, the group has taken the opportunity to reduce its net debt by £945,000 to around £1.9billion.
Tui shares were up 3.4 per cent to 601p early on Wednesday in further evidence of the confident mood around the travel firm.
WILDFIRES IN FOCUS:
Flames and smoke rise as a wildfire burns near the village of Asklipieio, on the island of Rhodes, Greece, July 24, 2023. Reuters/Nicolas EconomouChris Beauchamp, chief market analyst at IG Group, told ThisIsMoney: “Tui’s numbers seem to radiate confidence, and with good reason it seems.
“A swing back into profit and solid bookings in the near-term underline expectations of a better year ahead.
“Much depends now on whether the resurgence of optimism about 2024 proves correct.”
Emma-Lou Montgomery, associate director for personal investing at Fidelity International, also told the online publication: “Sun-seekers are a determined bunch and the drop-off in demand proved to be only a blip, with Tui saying bookings for the last week were up 5 per cent against summer 2022.”
She added: “The financial impact of the wildfires on Tui will inevitably last far longer, adding around €25million to Tui’s full year 2023 costs - but the group says business is ‘close to normal’ and earnings are set to be ‘substantially higher overall this year’.”
