Tui Group’s chief executive is hoping to see “better infrastructure” in place next year after air traffic disruption in Europe contributed to an 80% drop in quarterly earnings for the northern region – which includes the UK and Ireland.
Underlying Ebita (earnings before interest, taxes and amortization) for the group’s northern region – comprising the UK and Ireland, the Nordics, Canada and Russia – dropped by 80.2% year-on-year from €81 million to €16 million.
While Tui’s Q3 financial results showed UK bookings were ahead of last year (86% sold for the group), margins have reduced “primarily due to the weaker pound and also as a result of the weather”.
Despite the weather, Tui Group is maintaining its full year profits forecast, helped by “very strong bookings in the first nine months – up 4% year-on-year”.
The company said: “In the UK demand remains resilient, with customer volumes growing in the quarter, but as expected trading margins have continued to be impacted by the weaker pound.
“In addition, the UK result was adversely affected in the quarter by airline disruption, as a result of French air traffic control strikes, leading to delays, cancellations and staffing difficulties.”
Overall Tui saw a €13 million impact from airline disruption.
During a call with the media, Tui Group chief executive Fritz Joussen attributed the €13 million to denied boarding compensation.
“There are many problems – air traffic strikes and staffing and too few people in security – the list goes on,” said Joussen.
“Customers as well as touristic companies pay a lot of money for this infrastructure services and [the impact of the above] is not only something and it’s not just anecdotal – you see an increase of 128% year-on-year.
“We pay and the customers pay so we should be a lot stronger. Hopefully for 2019 we will see higher quality infrastructure. The quality has deteriorated and we think it should be better next year.”
The UK continues to see growth in demand for destinations such as Turkey, North Africa (including Tunisia), Bulgaria and Croatia, however, as well as a shortening of the average duration of holidays. “Turkey has been the star in our portfolio for a long time – the natural demand is coming back,” added Joussen.