TUI revenue up; challenges remain

TUI revealed “record” revenue of €3.6bn ($3.9bn) for the second quarter of 2024 – an increase of 16% over the prior year quarter. This was accompanied by a uplift in underlying group EBIT by €54 million to a loss of €189 million in the typically weaker quarter of the year. TUI disclosed that 2.8 million guests travelled on holiday with the company in the reporting period, 14% more than in the previous year – however the average load factor of 93% was flat compared to the previous year. TUI’s Q2 earnings also show that Winter 2023/24 period finished “strongly”, and that “overall the season recorded an increase in bookings of 9% and average prices up 3% on the previous year”. TUI said that while its Markets & Airlines segment benefited from stronger demand and higher prices, the underlying EBIT fell by €17.6 million to  a loss of €326.1 million. “Travelling is very popular,” said TUI CEO Sebastian Ebel. “The trends are intact. We see growth opportunities in new markets, through a broader offering and additional target groups. ""The transformation of the segments remains a central component of our strategy. The first two quarters of the year were very successful in operational terms. This underlines our strength in growing profitably in a dynamic market environment. We are aware of the ongoing challenges in the geopolitical environment and confirm our expectations regarding revenue and earnings growth,"" Ebel added. TUI operates an all-Boeing fleet of 787s and 737 MAX 8s, as well as older 737-800s. Due to the delayed deliveries of new aircraft, Ebel noted on an earnings call that the impact has been significant. “We have to fly elderly planes,” he said, adding that lease rates for older equipment had risen “significantly” as well as creating higher maintenance costs. He added though that the company had been successful in securing extensions on its current leased fleet. As a result, TUI expects incremental costs to rise this year, which could extend into the next few years if delays to the MAX continue. TUI had expected to take delivery of 14 more aircraft this year, which Ebel noted would have translated into cost savings thanks to 20% less fuel, less maintenance cost and the airline’s “very attractive buying prices”, he added that it was annoying that capacity will not arrive. TUI also has an order in place for the 18 737 MAX 10s, which remains uncertified. Ebel said: “We need the -10, which is not available, maybe the Dash-9 could help us, so a lot of things where we need to work together [with Boeing].” Ebel said that TUI had a “very strong case for compensation” and confirmed that the company was currently “in the middle of the negotiations”, commenting: “We think there is no reason not to give us a fair compensation. We are fighting hard for that.. and there will be a significant outcome.”