TUI sees return to profit in 2022 as summer demand soars

Holiday giant TUI said it expected to return to profit in 2022 with “significantly positive” earnings driven by summer demand as Covid travel restrictions eased.

The company on Wednesday said it was confident that summer bookings would be close to 2019 pre-Covid pandemic levels after first-half losses were more than halved.

The company posted an operating loss of €603m, down 54%, and added that the Ukraine war had not impacted its key markets of the UK, Germany and Benelux, with only Poland and the Nordic countries “subdued”. On a pre-tax basis losses were reduced to €130m between October and the end of March from €357m a year earlier, when travel virtually shut down due to the pandemic.

“After two years of turbulence and against the backdrop of current bookings and the business performance to date, we expect to return to significantly positive underlying earnings before interest and tax (EBIT) for financial year 2022,” TUI said in a statement.

In the second quarter, TUI's underlying EBIT narrowed to €330m, almost halving the €633m loss from a year ago.

The company said future bookings were “unabatedly high”, hitting 85% of levels seen for the summer of 2019 and accelerating over the past six weeks. British market bookings were up 11% on two years ago.

TUI said passenger numbers were almost 10 times higher over the six months at 1.9 million.

“The strong Easter business was already the first important indicator. The high demand for travel and the good business performance now confirm our forecasts. 2022 will be a good financial year with a strong travel summer,” said chief executive Fritz Joussen.

However, AJ Bell investment director Russ Mould said that despite the upbeat news on summer bookings, "there remains a big risk that momentum won’t be sustained given the pressures on consumers from the rising cost of living".

"We’ve already seen reports that big ticket retail items like sofa and electronic goods are suffering, so it makes sense to also suggest that holiday plans might be delayed once again if the costs keep going up."

“TUI argues there is pent-up demand for a summer holiday and that is certainly true. However, some families may not feel comfortable digging into their savings to fund a week on the beach when they can see their monthly bills going up by a large amount.”