NEWS BREXIT SPECIAL REPORT
REACTION: The UK vote to leave the EU sent shockwaves across Europe. Ian Taylor assesses the industry’s reaction
BREXIT FALLOUT
Fall in pound will dent Tui’s profits
Tui expects the decision to leave the EU to dent its profits due to a fall in the pound but is not predicting a big shift in travel habits. Chief financial officer Horst
Baier told Germany’s Börsen- Zeitung newspaper that the company had hedged against currency volatility and the oil price for the 2016-17 financial year. Tui makes about a third of its turnover in the UK. “There are no real risks
relevant to results because of the [Brexit] decision for the current financial year,” he said. “However, because of the pounds to euro [rate], we will feel an effect in the profit-and-loss account.” Baier said a sustained
weakening of the pound would hit purchasing power, making holidays abroad more expensive, but he doubted that would dampen Brits’ love of travel.
Baier said Brexit would
not affect Tui’s London stock market listing, saying: “London will remain an important financial centre in future.”
Travel chiefs say ‘no change’
Industry leaders insisted nothing will change for the time being in the travel sector but admitted uncertainties about consumer demand, regulatory issues and profits.
Leading companies said
they expect limited impact on their businesses, although they acknowledged a fall in sterling’s value could hit UK holidaymakers in resort and Tui expressed concern about the impact on consumer sentiment. EasyJet followed IAG in
downgrading its trading forecast, although the budget carrier blamed this chiefly on cancellations due to continuing strikes by French air traffic controllers. However, the airline forecast a fall in revenue per seat this summer due to “eco- nomic and consumer” uncertainty following the referendum. Airline association Iata
suggested “the number of UK air passengers could be 3%-5% lower by 2020” and carrier BMI Regional said it may consider moving its base from the UK. Abta warned of “a period of uncertainty”, but said: “In regulatory terms, we won’t see
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travelweekly.co.uk 30 June 2016
any immediate changes. Once the UK formally notifies the EU of its intention to leave, the remaining member states will have up to two years to offer the UK a deal for a future trading relationship. This can be extended if all parties agree. Until this process is resolved, everything will remain as it is now.” The association added:
“Abta will be working with the government to raise awareness of the priorities for travel businesses and UK travellers. We started this process some months ago with a programme of engagement with Leave campaigners in Westminster, and we’ve prepared a detailed list of policy and regulatory priorities.” IAG downgraded its profits
forecast, saying: “While IAG continues to expect a significant increase in operating profit this year, it no longer expects
“Abta will be working with the government to raise awareness of travel’s priorities”
to generate an operating profit increase similar to 2015.” However, the group said: “IAG believes the vote will not have a long-term material impact on its business.” EasyJet expressed similar confidence, saying the referendum result “will not have a material impact” on strategy or “long-term earnings growth”. It said: “EasyJet has been
preparing for this eventuality and working on a number of options. EasyJet’s initial focus will be to accelerate discussions with UK and EU governments and regulators to ensure the UK remains part of the single EU aviation market.” Tui Group chief executive Fritz Joussen said: “We trust the UK government will take all steps to ensure economic and political stability and to ensure holidaymak- ers will not be affected. We are well prepared and confident Tui Group will not be significantly affected.” But he added: “It remains to be
seen how the decision will affect consumer sentiment.” UKinbound chief executive
Deirdre Wells described the result as “disappointing”, warning it would have “far-reaching
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