TUI Group says summer trading good, on track to hike profits

Berlin

EUROPEAN travel group TUI said summer trading was very good with bookings for Greece, Turkey and Cyprus all growing strongly and that it was on track to increase profits by at least 10 per cent at constant currencies this year.

It narrowed its underlying core loss by more than half in the first quarter to 25.4 million euros (S$41.4 million). Its hotels and cruises businesses helped to boost earnings in what is typically a loss-making quarter for holiday companies, even as it took a hit from the insolvency of Austrian airline Niki. "Q1 2018 has shown that TUI is on track, we continue to grow," CEO Fritz Joussen said.

Rival Thomas Cook last week said that recovering demand for trips to Turkey would help offset the impact on its business of rising costs in Spain. The return of Turkey is a boost for tour operators because they can earn higher margins on holidays there, whereas Spain has seen rising hotel costs and increased competition, thus hurting profitability.

TUI was last year hit by the insolvency of Air Berlin, taking a 15 million euro charge after having to renegotiate lease agreements that it had with Germany's second-biggest airline.

It took another 20 million euro write-down in Q1, this time linked to a wet lease contract with Niki, a former unit of Air Berlin which filed for insolvency in December. REUTERS