BUSINESS NEWS Tui is confident of a strong 2020 after contracting ex-Thomas Cook hotels. Ian Taylor reports
Cook failure allowed Tui to grow UK market share
Tui seized the opportunity to “build market share” in the UK in the wake of Tomas Cook’s collapse, contracting with former Cook hotels and adding up to 13 aircraſt. Fritz Joussen, Tui group chief
executive, confirmed: “The capacity we put into the UK is significant. I’m confident the UK [market] will be the strongest [in 2020]. We added one million customers in the UK, two million seats and 10-13 aircraft. We hired a lot of Thomas Cook pilots.” Announcing Tui’s full-year results,
Joussen said: “We took the slots that became available in the UK and we took over hotels in destinations that contracted with Thomas Cook. We contracted some very good hotels. “We have the strength to protect
our business and grow. When the opportunity comes along, like the failure of Thomas Cook, we’ll build our market share.” Tui had taken the “traditional first-
mover advantage”, he said, adding: “We are the only company trusted to have capacity from many source markets, which is attractive for hoteliers.
“We contracted Cook’s hotels. We
were less successful only in Majorca and the Canaries. In these countries, because of the overcapacities, we were a little cautious. We needed to be sure the hotels will be filled. For the major Thomas Cook hotels, we are the only one who can offer different source markets. “Consolidation is happening,
so the market will be a little better. I assume [flight] prices of £19 will disappear from the UK. In Germany, it is less clear with [former Thomas Cook carrier] Condor still operating,
Tui has added 10-13 aircraft since Thomas Cook’s demise
with low prices and margins even more depressed. In the Nordics also, the company of Thomas Cook was bought by a billionaire and is competing like in the past.” But as a group, he said: “We’re
very bullish. [Our] growth will be accelerating.” Tui reported UK bookings for
summer 2020 up 18% year on year to December 1, with a quarter of the programme sold, and average prices up 3%. UK bookings for this winter were up by 4% to the start of this month, with average selling prices up 6%.
TUI’S 2019 RESULTS AT A GLANCE
Group turnover:
€18.9 billion (up 2.5% on 2018) Pre-tax profit:
€691 million (28% down) Operating profit:
€768 million (27% down)
‘Underlying’ operating profit: €893 million (25% down)
The underlying figure includes adjustments for disposals,
restructuring costs, one-off items etc.
Cost of 737 Max grounding: €293 million
Cost of Thomas Cook failure: €15 million
Underlying profit in core businesses:
Hotels & resorts: €451 million (down 2% year on year)
The prior year included €43 million of net disposal gains Cruises: €366 million (up 13%)
Destination experiences: €56 million (up 22%)
Markets & airlines:
€132 million (down 73%) Forecast profit for 2020:
€950 million to €1.05 billion Cost of grounding Boeing 737 Max led to 25% drop in underlying profits
Tui’s underlying profit for the 12 months to September fell 25% on last year to €893 million. It blamed the decline on the cost
of grounding the Boeing 737 Max, which it put at €293 million. Fritz Joussen, Tui group
chief executive, said: “Even in a challenging year, Tui delivered a
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strong operating performance, a robust balance sheet and growth in its hotels and resorts and cruises core businesses.” However, he reported the tour
operating or ‘markets and airlines’ business “continued to face a very challenging market and competitive environment”, listing the challenges
as “continued Brexit uncertainty, airline overcapacity in Europe and changes in customers’ booking behaviour”. Joussen said: “More than 70%
of our profits come from our cruise and hotels business. Our cruise business is maybe the most profitable in the world.”
He suggested the level of
demand in the UK and interest in Thomas Cook’s high street travel agencies had led the group to drop plans to close retail outlets. Joussen said: “For the time
being, there are enough customers for the retail network. Maybe we’ll even extend it.”
19 DECEMBER 2019 63
PICTURE: Shaun Flannery Photography
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