TUI makes Q3 loss after €75m in flight disruption costs
Holiday company TUI said the travel chaos seen across Europe this summer had pushed it to a posted a third-quarter operating loss as it incurred extra costs, but added that summer bookings were close to pre-pandemic levels.
The company on Wednesday narrowed underlying operating loss of €27m in the three months to June 30 compared with a loss of about €670m a year earlier. Flight cancellations due to staff shortages at airports cost TUI €75m.
Excluding those costs, adjusted operating profit came in at €48m, its first positive result since the Covid-19 crisis started.
Bookings for the period were at 90% of the level of summer 2019. For July and August, bookings rose to 93% of pre-pandemic levels, TUI said.
The company said it still expected this summer to almost hit 2019 bookings levels, while average prices were significantly higher than three years earlier.
"The combination of unparalleled industry ramp-up after the Covid-19 pandemic compounded by a tight labour market, has seen the aviation industry confronted with significant operational issues and disruptions, resulting in the increase of delayed departures and flight cancellations," the company said.
"This has been mainly caused by third party suppliers and airports due to a shortage in ground handling and airports security staff, reliability issues with lease-in partners and supplier maintenance delays. As a result, disruption costs increased by €75m in Q3, primarily due to significantly increased flight disruption cost events in the UK, and costs introduced relating to mitigations."
In May, TUI cancelled 180 flights from Manchester airport until the end of June, or six flights a day, as shortages of ground handling staff hit operations during school half-term holidays. Britain's biggest airports Heathrow and Gatwick have been most affected, with both telling airlines to cut flight schedules so they can cope with the demand.
Passengers trying to get away on long-awaited holidays have faced massive queues, lost luggage and cancelled flights as airlines and airports, having sacked thousands of staff during the Covid pandemic, struggle to recruit to meet soaring demand.
Reporting by Frank Prenesti at Sharecast.com