The tour operator said that while summer 2019 bookings were “broadly in line” with last year, “margins are not” based on “early visibility” of its Markets & Airlines sales.
The announcement sent Tui’s shares down by as much as 18.7% from £11.84 to as low as £9.63, before recovering slightly, during trading on the London Stock Exchange on Thursday (February 7).
Tui said margins for summer 2019 had been affected by “a continuation of the sector headwinds”, which include the negative impact from last year’s hot summer weather.
Other negative factors were a shift in demand from the western to eastern Mediterranean leading to overcapacity in the Canaries, and the “continued weakness” of the pound, which was “making it difficult to improve margins on holidays sold to UK customers”.
Tui said that ebita (earnings before interest, taxes, and amortisation) for 2019 would be “broadly stable” compared with its record profit of €1.18 billion in 2018.
But the company added it was “not reiterating” its previous guidance of increasing ebita by 10% each year for the three years up to 2020.
Tui said it was taking “specific measures” to tackle the current headwinds. These include reducing distribution costs by “shifting to more direct, more online, more mobile” sales, as well as “increasing upselling of activities and excursions”.
“We also expect that the continued sector headwinds may trigger market consolidation, and that Tui could be a beneficiary of this,” added Tui in a statement.
